Home » China hostage to zero Covid policy: private manufacturing SMEs confirm Goldman Sachs outlook

China hostage to zero Covid policy: private manufacturing SMEs confirm Goldman Sachs outlook

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The Caixin-Markit private China manufacturing SME index slipped into contraction in August.

The figure dropped from the previous 50.4 points to 49.5 points, below the 50 points, the dividing line between the contraction phase (values ​​below) and the expansion phase (values ​​above).

The manufacturing PMI also failed to meet expectations of a limited decline of 50.2 points.

The data thus confirmed the forecasts of the analysts of Goldman Sachs who, a few days ago, had written in a note to estimate a contraction both for the official manufacturing PMI drawn up by the Beijing government and for the private manufacturing PMI of Caixin-Markit.

Goldman Sachs had expected private manufacturing PMI to fall to 49.8 points from 50.4 in July.

Yesterday the official Chinese manufacturing SME was announced: the figure rose slightly from 49 points in July, to 49.4 points in August, doing better than the 49.2 points estimated by the consensus.

The estimates of the analysts of Goldman Sachs, which had forecast a further worsening of the contraction phase for the Chinese manufacturing SME, have been beaten, estimating a decline to 48.8 points for the month of August.

In justifying its outlook on China, Goldman Sachs cited the negative effects on the economy of the Zero Covid policy undertaken by the Beijing government in the fight against the pandemic, which continues to be characterized by restrictive measures.

The blackouts that hit the south-west of the country in August also affected the Chinese manufacturing scenario in August.

The day before yesterday, some of the most important cities in the country stepped up the restrictions measures already in place, in line with the zero Covid policy.

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In particular, the Shenzhen Longhua district, which has 2.5 million residents, had to close entertainment sites on orders from the municipal authorities and also suspend important events.

Residents have also not been required to show the results of the anti Covid swabs 24 hours before entering the residential complexes, while restaurants will have to limit the number of customers to half the capacity, according to what reported by Reuters.

The new restrictions will last until Saturday.

From Shenzhen to the cities of Chengdu and the northeastern port of Dalian, measures include lockdowns of large districts and even factory closures.

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