China Factory Activity Worsens in December as Covid Spreads

In December, China reversed its Covid Zero policy and the virus swept through major cities, causing people to stay home and businesses to close.

The manufacturing purchasing managers index fell to 47 this month from 48 in November. It was worse than a survey of economists.

The non-manufacturing index, which measures activity in the construction and services sectors, was lower than expected. Anything above 50 indicates expansion.

In December, the world's second-largest economy finally abandoned its long-held Covid Zero policy.

Surgeries led people to stay home and avoid shops, while factory production was capped, suggesting that economic activity was pushed off a cliff. Government operations were disrupted.

The policy shift and spread of Covid may cause more problems for the economy through the first quarter of 2023, with a likely travel rush during the upcoming lunar New Year holiday.

China was isolated from the rest of the world because of the curbs to prevent the spread of infections before the Covid Zero pivot. The downturn was caused by a persistent property market slump, sluggish consumer demand and waning overseas appetite for Chinese goods.

Now that Covid Zero has ended, economists think there's a chance for a faster and stronger rebound in the years to come. The growth is expected to pick up after the slow start in the first quarter.

With the help of John and Lin.