Economy
Lockdowns weigh on China’s corporate sentiment
A face mask worker is drilling a new residential building under construction in Beijing. Photo: Andy Wong / AP / dpa
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Economic indicators in China vary. Although the mood is brightening among small and medium-sized companies, the corona pandemic remains a setback.
In China, the mood in the management levels of industrial companies continues to point to rather weak economic growth.
The sentiment indicator of the business magazine «Caixin», which measures the situation in the smaller and medium-sized industrial companies, brightened in October, as the magazine announced on Monday. However, at 50.6 points after 50.0 points in the previous month, the index value is only just above the expansion threshold of 50 points, which indicates slight growth.
The state purchasing manager index, which was published on Sunday and shows the mood in the large and state-dominated industrial groups, showed a more gloomy picture. The state index value for the mood of purchasing managers in industry fell from 49.6 points in September to just 49.2 points in October. It is now below the expansion threshold for the second month in a row. Analysts were surprised by the sentiment damper on the state index value. They had expected a slight increase.
Costs rise, demand falls
“The recent lockdowns and supply bottlenecks are causing problems for people and the economy,” commented analyst Hou Zhou from Commerzbank on the latest sentiment data. He pointed to rising costs and weak demand. According to him, the economy in the second largest economy in the world weakened further in October.
The fact that the index value of the business magazine “Caixin” for small and medium-sized companies was better than the state index value, explained the Commerzbank expert with the consequences of the shortage of electricity in parts of the country. The Caixin Index covers more companies in China’s coastal areas, Hao Zhou said. These regions were far less affected by the electricity shortage than other regions of the country.
The chief economist for China at the Japanese Nomura bank, Ting Lu, did not want to rule out another mood damper in China’s industrial companies in November. He referred to the latest developments in the corona crisis and the fact that China’s leadership continues to take strict measures against the spread of the corona virus.