Saturday 31 July 2021
“Effects of Extreme Storms”
China’s industry is taking a hit
Chinese industry is growing more weakly in July than it has been since the beginning of the pandemic. Experts are particularly concerned about the low export business. This is not only due to the supply bottlenecks in world trade.
In China, the industry is losing momentum again after its strong recovery from the Corona crisis. This month, factory activity fell to its lowest level since the start of the corona pandemic, data from the Chinese statistics agency shows. The authority blamed, among other things, extreme weather for the decline.
According to the statistics agency, the so-called purchasing managers’ index (PMI) fell to 50.4 in July. In the previous month this value was still 50.9. An EMI above 50 is considered a sign of economic growth, and values below that are seen by experts as a signal that a country’s economy is shrinking.
Economists pay particular attention to the development of export business. “The most alarming signal is the new export orders index, which is at its lowest level since July last year,” said Zhiwei Zhang, chief economist at asset manager Pinpoint Asset Management.
Natural disaster weakened
Zhao Qinghe from the statistics bureau said that overall the Chinese economy is still growing, but that it is slowing down. Some companies in China used July to service their equipment, Zhao said. Increased raw material and logistics costs and delivery bottlenecks in world trade contributed to the slowdown. In combination with the “effects of extreme storms such as locally high temperatures, floods and natural disasters”, this has led to a “relative weakening” of growth in the manufacturing sector.
Zhao did not mention any specific severe weather disasters. In July, the central Chinese province of Henan suffered devastating floods caused by heavy rain. More than 70 people were killed and the property damage amounted to billions of yuan. In Henan, Foxconn, among others, operates factories that manufacture iPhones.
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