China's economic recovery falters as factory output declines even more.

China's economic recovery falters as factory output declines even more.

As China's economic recovery continues to falter, factory activity has plunged to its lowest point since the country terminated its zero-Covid policy in December.

Following the announcement of the May data, Asian markets fell, despite the fact that a tentative deal to increase the US debt ceiling, mediated by US President Joe Biden and House Speaker Kevin McCarthy, passed a crucial obstacle on Tuesday night.

firms, was down from its peak in December. Early in that month, Beijing lifted the majority of its pandemic restrictions, thereby ending its three-year-old zero-Covid policy.

According to information issued by the National Bureau of Statistics on Wednesday, China's official manufacturing Purchasing Managers' Index (PMI) decreased to 48.8 this month from 49.2 in April. The contraction was the second in as many months. Anything below 50 suggests contraction, whereas anything above 50 indicates expansion.

The index, which primarily focuses on state-owned and larger firms, 

From a reading of 56.4 in April to 54.5 in May, the official non-manufacturing PMI, which gauges confidence in the services and construction sectors, was at its lowest point in four months.

Zhiwei Zhang, president and chief economist for Pinpoint Asset Management, stated on Wednesday that "the economic recovery faces challenges." Domestic demand has recently deteriorated, in part because of the second wave of Covid and the slowing real estate market.

The housing sector in the second-largest economy in the world is still experiencing a historic decline. The nation is also preparing for a new Covid-19 wave.

The second wave of Covid infections, which are currently affecting 65 million people each week, is expected to climax by the end of June, according to a prediction made last week by renowned Chinese epidemiologist Zhong Nanshan. According to Beijing doctors who spoke to state media, both the hospitalisation rate and the percentage of significant consequences were low.

negative attitude

Zhang claimed that, given the possibility of a recession in the United States, foreign demand for Chinese commodities did not help the country's economic recovery. According to recent data, China's exports climbed by 8.5% in April, a dramatic decline from 14.8% in March, indicating a downturn in global demand.

"The sentiment in the financial market is quite bearish," he declared.

In response to China's manufacturing and services report, Hong Kong stocks decreased. With a 2.4% decline, the Hang Seng Index is on track to see its largest decline in more than two months. Among the important indexes in the area, it has had the weakest performance thus far on Wednesday.

Nikkei 225 (N225) of Japan also dropped 1.1%. Shanghai Composite Index in China decreased by 0.7%. Meanwhile, the Kospi in South Korea lost its early gains and decreased by 0.2%.