China's manufacturing activity declines in April

China issues the first economic data for April 2022, which is the implementation period of the Shanghai lockdown that has severely impacted the regional economy and trade with the rest of the world.

Domestic manufacturing activity saw a substantial contraction in April due to a surge of COVID-19 infections in the People's Republic of China territory and the uncertainties caused by geopolitical tensions.

Some local analysts have called for more political support to help the most affected companies resume production, improve logistics management and ensure the stability of supply chains.

According to data from the Chinese National Bureau of Statistics, the Purchasing Manager Index (PMI) for the manufacturing sector for the month of April 2022 was equal to 47.4, down from the value of 49.5 in March 2022. The indicator records the worst performance in the last two years; the PMI level above 50 indicates an expansion, while a figure below 50 confirms a contractionary phase.

Many companies have reported difficulties in transporting goods, materials and components. The indicator relating to industrial production marked 44.4 in April, down by 5.1 percentage points compared to the March figure, and the index relating to new purchase orders was 42.6 compared to 48.8 of the previous month.

China's non-manufacturing PMI hit 41.9 in April 2022, down from the 48.4 recorded in March. The pandemic and lockdown have had a substantial impact on the service sector since the start of the health crisis in February 2020, with the industrial sector suffering the most. Together with the infection containment, the government will have to implement a recovery plan for the most affected areas. Specific initiatives are expected for the municipality of Shanghai, which constitutes the economic heart of the country, with the largest port in the world by volume of containers, and a GDP that grew by more than 8 percent in 2021, up to 680 billion dollars.