Chinese enterprises quicken steps to resume production

China's official Purchasing Managers' Index (PMI) rose to 52 percent in March, up
16.3 percentage points from February, according to data jointly released by the
National Bureau of Statistics (NBS) and the China Federation of Logistics and
Purchasing.
As a month-on-month economic indicator, PMI reflects the short-term changes in
economic activity. Generally speaking, 50 percent separates monthly growth from
contraction. When PMI is above the 50-point mark, it indicates an expanding
manufacturing economy, and when the figure is below 50 percent, it reflects that the
economy is generally contracting.
“The data can be interpreted to mean that half of the manufacturing enterprises
embraced positive changes in production and business operations in March,”
according to Zhao Qinghe, a senior statistician with the NBS.
Statistics from Chinese steel trading website Zhaogang.com indicated that the
country's steel trading volume stood at 880,000 tons in February, only 30 percent of
last year’s average level. However, the figure increased explosively in March.
With positive changes taking place in domestic epidemic control and prevention,
downstream manufacturing and construction industries resumed production at a faster
pace in March, noted Gong Yingxin, secretary of the Party committee and senior vice
president of Zhaogang.com.
Gong disclosed that the daily steel trading volume on the platform has reached
160,000 tons, four times that in February, and the platform’s trading volume has
generally recovered to last year’s average.
Crown Advanced Material Co., Ltd. is a manufacturer of multifunctional composite
materials based in Yichun of east China’s Jiangxi province. In March, it kicked off the
second phase of a project of protective film, solar backboard and lithium battery
aluminum plastic film production with a total investment of one billion yuan ($141.6
million).
“Our orders have expanded by 30 percent year-on-year since we resumed production.
In March we delivered orders worth $4.5 million to our overseas clients,” said Yan
Hongjia, president of the company.
China made positive progress in coordinating epidemic control and economic
development in March, and enterprises have been resuming production at a faster
speed, said Zhao.

However, the single-month rise doesn’t necessarily mean the production and
operation have been back to pre-outbreak levels, according to head of the Service
Survey Center with the NBS, who told People’s Daily that the upturn of economy

only comes when the PMI moves up for at least three consecutive months.
A survey indicated that enterprises still face significant pressure to further boost
production and operation despite the expanding PMI, Zhao pointed out. In March,
41.7 percent of manufacturing enterprises reported insufficient capital provisions, up
2.6 percentage points from the previous month and 52.3 percent reported sluggish
market demand, 4.1 percentage points higher than February.
Zhongjie Footwear Co., Ltd. in Yifeng county, Yichun of Jiangxi province mainly
exports shoes to Europe and the U.S. Due to the global spread of the pandemic, its
export orders for the following months have shrunk by 40 to 50 percent, which brings
a monthly loss of nearly 4 million yuan to a single branch factory of the company
alone.
“We had planned to recruit 300 workers at the beginning of March to complete orders
placed before the outbreak, However, we didn’t expect the pandemic to exacerbate so
quickly overseas. Many of our foreign clients have been cancelling or postponing
orders since mid-March,” said He Jiating, head of the company.
The NBS statistics indicated that the index of new export orders and the import index
of Chinese enterprises ticked up to 46.4 and 48.4 percent, respectively in March, but
were still mired in contraction.
To match effective supply and effective demand is an important criterion to evaluate
the effectiveness of production resumption. In promoting resumption of work and
production, the demand side must be improved, and supply-side structural reform
should be deepened in a solid manner. In addition, targeted measures should be rolled
out based on market demand, so as to avoid inefficient and blind development, and
reduce overstaffing, wasting of materials and inefficient circulation of capital.
Doing so, the losses caused by the epidemic can be minimized and the foundation for
further economic recovery is consolidated.
Currently, epidemic control and the economic situation are seeing major new changes,
both in China and abroad, Zhao said. The country faces huge pressure brought by
imported cases of novel coronavirus disease, which challenges its economic
development, especially the recovery of the industrial chain. Therefore, PMI data
need to be further observed.