Saturday, July 4, 2020

Chinese Factories Struggle to Fire in April as Slump in Export Orders Deepens

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BEIJING—China’s factories suffered a collapse in export orders in April, twin surveys showed, suggesting a full-blown recovery appeared some way off as the CCP virus health crisis shut down large parts of the world economy.

The sobering result comes amid moves by major nations to ease up on lockdowns, underlining the stiff challenges facing businesses as policymakers brace for the worst global slump since the Great Depression.

China’s official Purchasing Managers’ Index (PMI) eased to 50.8 in April from 52 in March, the National Bureau of Statistics said on April 30, but stayed above the neutral 50-point mark that separates growth from contraction on a monthly basis.

Analysts polled by Reuters had expected a PMI reading of 51.

Worryingly, a sub-index of export orders for the world’s biggest exporter dived to 33.5 in April from 46.4 in March with some factories even having their orders cancelled after reopening, said Zhao Qinghe, senior statistician at the NBS.

Export orders in the private Caixin/Markit Manufacturing Purchasing Managers’ Index (PMI) survey, also released on Thursday, contracted at the fastest pace since the global financial crisis. The survey, which focuses mostly on small and export-oriented businesses, showed activity for Chinese factories unexpectedly shrank this month.

“It is still too early to conclude that the Chinese economy is growing again,” said Iris Pang, Greater China chief economist at ING.

“The Western world has yet to relax some of its city lockdowns. And even after the lockdowns are relaxed, it is uncertain when demand will return to pre-Covid levels due to strict social distancing measures implemented domestically and in foreign economies.”

With the CCP (Chinese Communist Party) virus, commonly known as the novel coronavirus, largely under control domestically, China’s economy has begun to open up again as authorities loosen lockdown restrictions.

But major economies, including the United States and Europe, remain in the grip of the pandemic amid mounting infections and deaths. Analysts warn the rest of the year will be bumpy…

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