Sat, 13 Aug 2022

Communist party concerned as China factory output falls

Robert Besser
03 Aug 2022, 17:16 GMT+10

BEIJING, China: A report released this week showed that the recovery of the Chinese manufacturing sector from COVID-19-related lockdowns faltered in July.

During a politically-sensitive year when President Xi Jinping is expected to tighten his grip on power, this economic downturn is adding to pressure on the struggling economy.

According to the national statistics agency and an official industry group, the China Federation of Logistics and Purchasing, weak global demand, along with ongoing anti-COVID-19 controls that curbed consumer spending, have dampened factory activity in the country.

A monthly purchasing managers' index issued by the Federation and the National Bureau of Statistics dropped to 49, compared with 50.2 in June.

On the 100-point scale, numbers below 50 indicate declining activity.

New orders, exports and employment also declined.

Economist Zhang Liqun, in a statement issued by the Federation, said, "Downward pressure is great. The impact of the epidemic is still on the rise."

After output shrank in the three months ending in June compared with the previous quarter, the Chinese Communist Party has stopped talking about this year's official economic growth target of 5.5 percent.

This autumn, a meeting of the ruling party will take place in Beijing, and Xi is expected to grant himself a third five-year term as party leader, therefore breaking with tradition.

However, the economic slowdown, which could increase the risk of politically-uncomfortable job losses, will add to challenges facing the party, which has promised tax rebates and other aid to help entrepreneurs.

Meanwhile, the port of Shanghai, the world's busiest, said activity is back to normal, though factories and other companies are still operating under anti-COVID-19 controls that limit their workforces and stifle production.

Due to concerns about rising debt, Chinese leaders have also avoided large-scale stimulus spending.

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