Activity in the Chinese industry recovered sharply in March, after the strongest contraction for China’s industry was seen in February, due to the corona crisis. With this, the world’s second economy appears to be cautiously recovering from the severe blow to the virus outbreak.
According to the Chinese statistics agency, the purchasing managers index, which measures industrial activity, jumped last month to a level of 52. This was an absolute low of 35.7 in February. A level of 50 or more indicates growth, below that shrinkage. The figure turned out better than economists had expected, because they had still expected shrinkage.
Economists have argued that the Chinese economy is far from fully recovered from the boom from the corona crisis and that there will still be a strong recession in the first quarter. Moreover, China is now also increasingly struggling with weakening foreign demand because the virus has spread worldwide. This means that the Chinese economy will also likely experience major headwinds in the second quarter.
The Chinese government is likely to come up with more measures to boost domestic demand to help offset less demand from the rest of the world. Beijing has already pumped billions into the financial system to deal with the crisis.
The statistics office also came up with data on the services sector of China. It also rebounded last month, after the deep contraction in February. The Chinese services sector, with tourism, air travel, catering and retail, for example, was hit hard by the virus as public life almost completely came to a halt to counter the outbreak. Public life in China seems to be slowly getting going again.