After a short relief in June, China’s big factories are at a low point again.

A survey released by the National Bureau of Statistics on July 31 showed that the manufacturing purchasing managers’ Index (PMI) dropped to 49.0 in July from 50.2 in June. The index is under 50-point also indicates contraction.

NBS senior statistician Zhao Qinghe wrote, “Overall, the level of economic prosperity in China has fallen, the foundation for recovery still needs consolidation.”

About the contraction, Zhao attributes the key causes to the off-season of production, insufficient release of market demand, and continuous contraction of high-energy-consuming industries.

Factories are also holding back their buying plans as the costs of raw materials continue to be erratic. The purchasing volume index subtracted by 2.2 point from June to 48.9 in July.

Manufacturers also suffered rising inadequate market demand for four consecutive months, with Zhao saying that it exceeded 50 in July.

Contraction of oil, coal, and metal smelting industries persisted for the fourth consecutive month as well. Related companies are pessimistic about the development prospects of the industry.

Reuters says experts did not expect the fall in China’s manufacturing activity for July. A poll showed that they anticipated at least 50.4, which could have been a growth from June.

Bruce Pang, chief economist and head of research at Jones Lang Lasalle Inc, commented. “Q3 growth may face greater challenges than expected, as recovery is slow and fragile.”

July also saw COVID-19 striking the world’s second-largest economy again after a slight break time from the Shanghai lockdown removal in June.

Citing World Economics, Reuters reported that China’s pandemic curbs had some influence on 41% of Chinese enterprises in July.

Beijing’s survey showed that the official non-manufacturing PMI decreased from 0.9% in June to 53.8 in the following month. The manufacturing and service components of the official composite PMI decreased 1.6 points to 52.5.

There has been a widespread expectation that China would miss its 5.5 GDP growth ambition for 2022 after Beijing skipped mentioning the target in a speech on July 28.

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