Whereas the economies of some countries are rapidly expanding despite the current risks, China can only dream of it. In wake of the devastating Zero-Covid Policy and other headwinds, the second-largest economy is unable to get back on track.
Not long ago, the National Statistics Bureau of China published fresh reports on the state of the economy. The Manufacturing PMI Index dwindled to 48 in November. Notably, a PMI reading above 50 indicates growth, whereas a reading below 50 signals economic contraction. The latest PMI Index turned out to be the worst since April. China’s manufacturing sector has been declining for the second month in a row. In the service sector, the situation is more dismal. The Services PMI Index shrunk to 46.7 in November, showing the fastest pace of decrease since April.
The tough virus restrictions introduced in many regions of the country have become the main reasons for China’s economic woes. Oftentimes, new lockdowns led to the shutdown of factories. The virus situation is likely to get even worse and put downside pressure on the economy in 2023, Sheena Yue, an economist at Capital Economics, pointed out.
Automakers are facing a shortage of components due to the Zero-Covid Policy imposed by the government to curb the coronavirus spread. It forced companies to close production lines as well as entire factories.
