Asian factories under pressure because of China

Factory activity in Asia continued to weaken in December, as demand in China fell short of expectations.

The S&P Global Manufacturing Purchasing Managers’ Index (PMI) released on January 2 showed that factory activity in most Asian economies continued to contract in December 2023, with the PMI below 50 points. South Korea recorded a PMI of 49.9 points in December. Manufacturing in Taiwan (China) contracted for the 12th consecutive month. Similarly, manufacturing in Malaysia also weakened.

China's Caixin PMI showed manufacturing unexpectedly accelerated in December. However, the official index released by authorities on December 31 fell for the third consecutive month, coming in at 49.

Analysts say China’s mixed economic outlook continues to cast a shadow over its major trading partners. “Overall, China’s manufacturing sector improved in December, as demand and supply increased and prices stabilized,” said Wang Zhe, senior economist at Caixin Insight Group.

However, he said employment remains a major challenge for the world's second-largest economy. Businesses are also worried about the outlook, making them cautious about hiring, purchasing raw materials and managing inventories.

Workers at a NIO electric car factory in Anhui, China. Photo: Reuters

Beijing has announced a series of measures in recent months to speed up the recovery from the pandemic, but progress has been slow due to a lingering property crisis, high local government debt and weak external demand.

Manufacturing in Asia is less optimistic, but other data points to a recovery from the pandemic here picking up speed. Data on January 1 showed Singapore's GDP rose in December compared to a year earlier, thanks to a rebound in construction and manufacturing.

South Korea's exports also picked up in December, though the increase was modest as weak demand from China weighed on booming global semiconductor sales.

Ha Thu (according to Reuters)

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