China’s factories face downward pressure in first quarter
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At a Zhejiang Pulde Electric Appliance Company Ltd factory, workers make heat guns that can be exported. This was done in Jinhua Zhejiang on January 17, 2022.
Hu Xiaofei | Visual China Group | Getty Images
BEIJING — China’s factory production faces “rather large” downward pressure for the first quarter, an official with the national Ministry of Industry and Information Technology said Thursday.
Representative Luo Junjie stated that the decline in industrial growth is due to weakening global trade growth, the lack of consumer demands, and many other factors.
According to CNBC’s translation, Luo stated in Mandarin that “on top of all this, recently, the coronavirus spread to many places.” “The industrial economy continues to face significant pressure during the first quarter.”
In response to Covid outbreaks that began in China, authorities from the Chinese government have increased travel restrictions and locked down the area since late December.
The recent supply chain lockdowns had a limited and short-term impact, said Tian Yulong, chief engineer and spokesperson of the Ministry of Industry and Information Technology.
The chip shortage won’t last long
Luo, the industry minister said that while there has been a decrease in shortages of semiconductors, it will still be difficult to find them for some time. He also serves as director of the bureau responsible for monitoring and coordination operations.
China saw a 33% increase in semiconductor production over the previous year. According to data published Monday, December’s chip production was up 1.9% year on year to 29.9 Billion units. Dec. saw an increase of 3.4% in automobile production, which was the first growth since April.
Local governments used quick lockdowns to stop the spread of coronavirus in China, since the peak of the pandemic. The country was able to quickly stop the spread of the virus and resume production with the zero-Covid policy.
Citi Analysis even reported Jan. 7, that the “supply chain relocation out China appears to be slowing or even being reversed in light of the Covid-19 global pandemics.”
“China’s coronavirus outbreak has been contained effectively, allowing its factories to rapidly resume production,” Xiaowen Jin of Citi and a group wrote. China’s rather comprehensive industrial system allowed it to be the “production of last resort” for other countries during the period when Covid-19 spread to both developing and developed economies.
Ting Lu, Nomura’s Chief China Economics Officer, said that omicron has a high transmissibility, meaning the policy’s costs are rising while the benefits are declining.
This is the current policy. has affected consumers more than factories.
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