The rapid spread of the novel virus COVID-19 has heavily affected China’s economy dragging down the country’s manufacturing sector. According to the National Bureau of Statistics, in February 2020, the Purchasing Managers Index (PMI) of China dropped to an all-time low of 35.7 from 50 in January. PMI reading above 50 indicates expansion, while a reading below that point signals contraction. China’s services and construction sectors collapsed from 54.1 in January to a record low of 29.6 in February. Economists, however, expected the manufacturing PMI to contract to 46 and the services PMI - to 47 percentage points. In February 2020, the composite PMI output index plunged to its lowest level of 28.9 percentage points, indicating the overall decline in the production and service sector in China. The Caixin/Markit factory Purchasing Managers’ Index for February 2020 plummeted to 40.3 points from 51.1 in January. Experts stress that this is the worst reading recorded over the last few years. Judging by the current economic indicators, China is on the verge of a deep and long-term recession triggered by the coronavirus outbreak. The epidemic has caused disruption in manufacturing activity, travelling restrictions and is having an overall negative impact on every sector of the country’s economy.
