China’s economy is showing signs of a strong recovery after lifting strict restrictions due to the COVID-19 pandemic.
China’s National Bureau of Statistics reported on Wednesday that the Manufacturing Purchasing Managers’ Index (PMI) had climbed to its highest level since April 2012, reaching 52.6 last month. According to Bloomberg, this is the highest reading in recent memory. The non-manufacturing index, which measures activity in the services and construction sectors, rose to 56.3. Both indices exceeded economists’ expectations.
The indices provide the first comprehensive data on the economy’s recovery after abandoning the policy of zero tolerance for COVID-19 at the end of last year. The waves of contagion began to subside, and businesses returned to normal operations after the Lunar New Year holidays. The figures add to other signs of economic recovery ahead of the National People’s Congress next week, when a new growth target will be announced.
Analysts estimate that decent index readings indicate a solid recovery in early 2023 and represent a positive note for the upcoming National People’s Congress. They expect the government in Beijing to implement further supportive policies to underpin the recovery.
Other data signaled an increase in domestic demand. Sales of houses and apartments in China rose in February from a year earlier, the first increase since June 2021, due to expanded government support for the real estate sector. Traffic congestion in major cities has increased. Moreover, subway ridership has returned to pre-pandemic levels, and spending at restaurants and malls has increased.
China‘s economy on the verge of a rebound
Encouraging data encouraged the growth of shares, so the Hang Seng index, which tracks Chinese companies listed on the Hong Kong stock exchange, rose by 5.1 percent. The price of copper on the London Metal Exchange rose by one percent, and aluminum, zinc, and iron ore, also rose in price.
Economists warn that while improving factory data suggests the recovery is becoming more balanced, headwinds remain as global demand remains weak and exports are likely to decline this year. According to Bloomberg Economics, keeping up with the rapid pace of Chinese growth will take a lot of work.
