China’s manufacturing activity fell in January for the first time in four months, according to official statistics released Monday, as Beijing struggles to maintain the rebound in the world’s second-largest economy.
Policymakers have struggled to overcome a post-pandemic depression caused by a housing crisis, low spending, and huge government debt.
According to the National Bureau of Statistics (NBS), the Purchasing Managers’ Index (PMI) — a crucial indicator of industrial activity — was 49.1 in January, falling short of the 50-point threshold that distinguishes expansion from contraction.
The reading fell from 50.1 in December, which was the third consecutive month in positive territory after finishing a six-month drop in October.
According to NBS statistician Zhao Qinghe, the January drop was “affected by the approaching Lunar New Year holiday and the concentrated return of business employees to their hometowns”.
Zhao said that output and demand decreased in the run-up to the eight-day public vacation from January 28 to February 4.
“Economic momentum unexpectedly slowed in both manufacturing and service sectors ahead of the Chinese New Year,” Zhiwei Zhang, president and chief economist at Pinpoint Asset Management, wrote in a note.
“Part of the slowdown may be due to weaker external demand, as the new export orders index dropped to the lowest level since March last year,” Zhang pointed out.
In recent months, Beijing has announced a slew of strong measures geared at promoting economy, including interest rate cuts, the lifting of home-buying restrictions, and the reduction of local governments’ debt burden.
However, experts caution that more direct fiscal stimulus focused at boosting domestic demand is required to restore full health to the economy, which has battled to recover since the Covid-19 epidemic.
