China's factory activity drops amid renewed COVID-19 restrictions
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Factory activity in China fell in November following new COVID-19 restrictions that have sparked protests across the country.
The official factory statistics in China revealed that activity fell to its lowest level since April 2022. The Purchasing Managers Index for November dropped from 49.2 in October to 48, according to the BBC.
If factory activity falls below the 50-point mark, that is typically an indication of economic contraction rather than growth. Earlier expectations by analysts predicted a dip to only 49, according to Reuters.
Each PMI reading is sequential and changes from month to month depending on the factory output. Recent COVID-19 restrictions in China have damaged global demand as well as caused civil unrest in the world's second-largest economy.
COVID-19 restrictions have led to a drop in factory activity in China for November. (VCG via Getty Images / Getty Images)
Moreover, China's non-manufacturing PMI dropped to its lowest point in seven months, from 48.7 in October to 46.7 in November. This reading represents business sentiment in China's service and construction industry.
The Chinese government's zero-COVID policy sparked thousands of students and others to protest in different city streets across the country, with some even chanting for President Xi Jinping to resign.
IMF OFFICIAL TELLS CHINA TO DROP 'ZERO-COVID' STRATEGY TO SAVE ITS ECONOMY
In recent weeks, the country has seen a continued rise in COVID-19 cases, with over 37,000 cases confirmed on Tuesday. Health officials in China have claimed that the country would work to reduce the financial burden resulting from pandemic restrictions.
On Tuesday, the head of the International Monetary Fund, Kristalina Georgieva, urged the Chinese government to consider a "recalibration" of its zero-COVID policy because of the negative "impact it has on both people and on the economy."
China's COVID-19 restrictions have added to a global economy struggling with high inflation, an energy crisis and strained food supplies.