Chinese factory activity slumps in July, weighing on weak economy: survey

The recovery of China’s manufacturing industry from antivirus shutdowns faltered in July as activity slumped, a survey showed on Sunday, adding to pressure on the struggling economy in a politically sensitive year where President Xi Jinping is expected to attempt to extend his term in power.

Factory activity has been depressed by weak global demand and virus controls weighing on domestic consumer spending, according to the national statistics agency and an official industry group, the China Logistics and Purchasing Federation. .

A monthly Purchasing Managers’ Index released by the Federation and the National Bureau of Statistics fell to 49 from 50.2 in June on a 100-point scale on which numbers below 50 indicate declining activity. The new orders, exports and employment sub-measures declined.

The downward pressure is great, economist Zhang Liqun said in a statement released by the Federation. The impact of the epidemic continues to increase.

The ruling Communist Party dropped talk of the official economic growth target of 5.5% for this year after output fell in the three months to June from the previous quarter.

The slowdown, which increases the risk of politically volatile job losses, adds to challenges for Beijing ahead of a ruling party meeting in October or November, when Xi is expected to try to break with tradition and give himself a third five-term term. years at the head of the party. .

An announcement by party leaders on Thursday promised to strive for the best results but avoided mentioning the annual growth target announced in March.

The party has promised tax cuts and other aid to help entrepreneurs after virus checks temporarily shuttered Shanghai and other industrial hubs from late March.

The world’s busiest port of Shanghai says activity has returned to normal, but factories and other businesses are operating under virus checks that limit their workforce and weigh on production.

A production index fell to 49.8 from 52.8 in June. New orders fell 1.9 points to 48.5. New export orders fell 2.1 points to 47.4.

China’s leaders have avoided large-scale stimulus spending, perhaps for fear of reigniting a dangerously high debt run they fear.

(Only the title and image of this report may have been edited by Business Standard staff; the rest of the content is auto-generated from a syndicated feed.)

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