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| The Chinese economy is showing signs of losing momentum in its recovery. (Photo: Tomoko Wakasugi) |
China's National Bureau of Statistics (NBS) said the official Purchasing Managers' Index (PMI) for the manufacturing sector – a key measure of factory output – fell to 48.8 in May 2023, below the 50-point mark that separates growth from contraction.
This figure follows a decline of 49.2 in April 2023, reversing a three-month growth trend and falling short of the average estimate of 49.5 from economists surveyed by Bloomberg .
In addition, official data released on May 28th also showed that profits of industrial enterprises in China fell sharply in the first four months of 2023. Companies continue to struggle with pressure to increase profit margins amid weak demand due to the economy not recovering as strongly as expected.
According to data from China's National Bureau of Statistics, industrial profits fell 20.6% in the first four months of this year compared to the same period last year. In April alone, the decline was 18.2%, following a 19.2% drop in March.
According to Zhiwei Zhang, Chairman and chief economist at Pinpoint Asset Management, the decline in the PMI index indicates that the economic recovery is facing challenges.
Mr. Zhang also stated that the cooling real estate market and the burgeoning second wave of Covid-19 have weakened domestic demand.
The Chinese economy grew by 4.5% in the first quarter of 2023, as the country reopened after a period of strict health control measures to combat the epidemic.
However, a host of pressing issues are weighing on the world's second-largest economy, including a debt-ridden real estate sector, weak consumer confidence, and the risk of recession in other economies.
China is also struggling to cope with the Covid-19 outbreak, but there are few signs that tightening policies will be reintroduced.
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