By Gina Lee

Investing.com – China’s manufacturing and services sectors in March 2022 for the first time in two years and highlighted the urgency for more policy intervention to stabilize the economy.

The National Bureau of Statistics data was released earlier that day and showed that the figure stood at 49.5 Forecasts prepared by Investing.com predicted a 49.9 figure, while February’s figure was 50.2. The was at 48.4, compared to the previous month’s 51.6 figure.

In February 2020, both PMIs fell below 50. This was when COVID spread from Wuhan. In recent years, more severe outbreaks have been reported in Shenzhen (Shanghai) and Shenzhen (Shenzhen).

Zhao Qinghe, a senior statistician at NBS, stated that recent outbreaks in China have caused clusters of severe epidemics. This was in addition to a substantial increase in geopolitical instability. These factors have affected the production and operations of Chinese companies.

Pinpoint Asset Management’s chief economist Zhiwei Zhiwei Zhang told Reuters that PMI weakened after omicron epidemics in several Chinese cities caused lockdowns, disruptions to industrial production, and other investors also agreed. Economic activity will slow down in April, as the Shanghai lockdown occurred in March.

Tesla Inc. (NASDAQ:) was the company which recently closed its Shanghai plant to comply with COVID-19.

“Due to the epidemic outbreaks, some companies in some areas temporarily reduced production or stopped production, which also affected the normal production and operation of both upstream and downstream companies,” said NBS’ Zhao.

Zhao stated that companies may also have to cancel or reduce orders placed overseas because of geopolitical risks.

Factory jobs were also affected by lower production and less demand.

The PMIs may have underestimated last month’s activity impact. The index of services remained higher than the 45.2 mark it had reached during last August’s Delta wave. This is probably due to the fact that the survey was done before the most severe disruptions”, Julian Evans-Pritchard, senior China economist at Capital Economics, told Reuters.

Authorities have announced steps to help businesses, such as rent exclusions for small service-sector companies, in order to cushion the effects of COVID-19 lockdowns.

Analysts predict that the People’s Bank of China will reduce rates and decrease reserve requirements to banks in response to economic downturns.