[Asia Economy Beijing=Special Correspondent Park Sun-mi] China's manufacturing sector in March saw a 'surprising' recovery from the COVID-19 shock across both large state-owned enterprises and small to medium-sized private companies.
On the 1st, Chinese financial information provider Caixin reported that the manufacturing Purchasing Managers' Index (PMI) for March stood at 50.1. This marked a significant improvement from the February manufacturing PMI of 26.5, which was the lowest level since the index began.
The PMI uses 50 as the baseline; a reading above 50 indicates economic expansion, while below 50 signals contraction. As it is one of the earliest monthly economic indicators released, it is regarded as an important gauge of the economic situation.
Unlike the official manufacturing PMI from the National Bureau of Statistics, which mainly targets large state-owned enterprises, the Caixin manufacturing PMI is primarily used as a key reference for assessing the conditions of Chinese export companies and small to medium-sized enterprises. Since the official manufacturing PMI for March, announced the previous day, also exceeded the baseline of 50 indicating an expansion phase, it suggests that China's manufacturing sector is improving regardless of whether the companies are large state-owned or small private enterprises.
The manufacturing PMI announced by the National Bureau of Statistics the previous day was 52.0. This not only surpassed experts' forecast of 44.8 but also rose 16.3 points from the historic low of 35.7 recorded in February, exceeding the baseline of 50. Looking at the detailed components, the production index, which reflects production trends, rose 26.3 points from the previous month to 54.1. The new orders index also increased by 22.7 points to 52, revealing the recovery of the manufacturing market. The raw materials inventory index and employment index recorded 49.0 and 50.9 respectively, rising 15.1 and 19.1 points from the previous month. By company size, large enterprises scored 52.6, medium-sized enterprises 51.5, and small enterprises 50.9, showing a clearer recovery as the size increased.
The dramatic improvement in the manufacturing PMI is attributed to factories that had halted operations due to strengthened COVID-19 prevention measures resuming full-scale production in March. However, both the National Bureau of Statistics and Caixin responded that while the Chinese economy is indeed recovering, it is premature to say it has fully normalized to pre-COVID-19 levels.
Caixin stated on the day, "Although corporate production is recovering, demand and employment both inside and outside China remain in a contraction phase, and industrial restarts are not yet sufficient," adding, "The manufacturing sector has basically improved, but the extent of improvement remains limited." Earlier, the National Bureau of Statistics also noted, "Since the PMI sensitively reflects short-term economic changes, it shows improvements in corporate production and management, but it is too early to conclude that the Chinese economy has fully normalized. We need to continue monitoring the trend."
Meanwhile, according to the Ministry of Industry and Information Technology (MIIT) of China, 98.6% of Chinese companies with sales exceeding 20 million yuan had resumed operations as of the 28th, and 89.9% of employees had returned to work.
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