Dislocation in domestic, external recoveries

• Tuesday, January 5, 2021
• Source:ferro-alloys.com

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• Keywords:purchasing managers' index, Dislocation, domestic, external, recoveries

[Ferro-Alloys.com] The purchasing managers' index of China's manufacturing industry was 51.9 percent in December, 0.2 percentage points lower than the previous month, according to the National Bureau of Statistics.

 

While domestic demand and production have seen a marked fall, particularly in the oil, chemical engineering and pharmaceutical industries, external demand remains comparatively resilient.

 

While the PMI fell, the price index soared to a yearly high, indicating the mounting pressure from rising production costs, particularly in the industries related to oil, energy, nonferrous metals, and iron and steel.

 

In the service sector, the business activity index was 54.8 percent in December, 0.9 percentage points lower than the previous month. Aviation, construction, telecommunications and the financial sector remain active and growing, while catering, real estate and environmental industries are contracting.

 

That said, it is clear that the pandemic is still taking its toll on the Chinese economy. Considering its close connection with the global economic system, the divergences in the extent, depth and duration of macroeconomic restoration policies between China and other major economies will cause differentials in the main indexes of the Chinese economy.

 

It is projected that before people's spending power is enhanced with the increase of income, and industries' operation costs is substantially lowered, the gap between domestic and foreign demand will further widen this year, as the stimulus packages some other major economies look set to continuously roll out will be translated into robust demand for the Chinese manufacturing industries.

 

To prevent the widening gap from distorting the restructuring process of the economy, China must increase its inputs into upgrading its public services, increase people's disposable income, improve the business environment and promote innovation so as to set the stage for the rebound of domestic demand.

 

Source: China Daily

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• [Editor:kangmingfei]