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Chinese factories have recovered from the pandemic widespread as businesses reported its expansion for July, marking its fastest pace in almost ten years.
In a published survey of IHS Markit Caixin, in partnership with a Chinese media outlet Caixin on Monday, manufacturing companies registered fast expansions of both new orders and outputs since January.
The Purchasing Managers’ Index (PMI) survey examined a substantial balance between large and state-owned factories. The July PMI indicated that Chinese companies continued to expand amid the shuttering impact of the pandemic to the global economy.
“As production and demand expanded, measures for purchases and stocks of purchased items remained strong,” said Wang Zhe, senior economist at Caixin Insight Group.
Wang also explained that the flare-ups of the virus in various areas had little to no effect on the manufacturing economy’s improving trend. The senior economist added that Caixin China General Manufacturing PMI increased at 51.2 in June and went up to 52.8 in July, reaching the highest since January 2011.
It indicates that the manufacturing sector continues to expand in the midst of global recovery and adjustment to the new normal due to pandemic.
Caixin and IHS Markit also noted that manufacturers surveyed pinpointed the booming effect of the rising consumer demand in China to July’s unprecedented growth.
“The supply and demand sides both improved, with relevant indicators maintaining strong momentum,” as stated in the Caixin China General Manufacturing PMI Press Release.
It was also mentioned that the group still needs to look through the weakness in both employment and overseas requirements.
Julian Evans-Pritchard, a senior China economist at Capital Economics, analyzed that the survey also showed the policy stimulus’ impact in helping the Asian economic powerhouse in its roadmap to pandemic recovery.
“The survey data are consistent with our view that policy stimulus has paved the way for a period of above-trend growth in construction and industry,” the senior economist wrote. “In the near-term, this should help offset continued weakness in consumption and services activity, allowing the economy to return to its pre-virus trend by year-end,” he added.
It can be recalled that the World Bank predicted that China’s 2020 GDP growth would drop to 1.6%, foreseen as the most significant slowdown in its economy in the last four decades. They also stated that the external demand remained in a fragile state despite the rise of the manufacturing and domestic economies.