Coronavirus: China’s March PMI steadies, but economy not out of the woods yet

Despite PMI data showing a return to growth in both the manufacturing and non-manufacturing sectors, China’s economic activity is still far from normal

Headwinds include the threat of global recession, a second wave of coronavirus infections and a property slump, analysts warn

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China’s economy has shown signs of recovery after a dismal start to the year. Photo: Xinhua

Published: 6:30pm, 31 Mar 2020Updated: 11:26pm, 31 Mar 2020

China's economy showed signs of a recovery in March after a nationwide lockdown paralysed business in February, but analysts warned that it is not yet out of the woods.

Despite stronger-than-expected government data released on Tuesday, a series of threats lying ahead could derail China’s fragile recovery, including a second wave of infections, a global recession, worsening deflation due to plunging oil prices and a potentially sharp fall in the property market.

“While the lowest point is behind us, it’s not the time to celebrate,” said Larry Hu, chief China economist at Macquarie Bank.

For now, March’s figures suggest that business conditions are improving considerably, as more people are able to return to work and coronavirus cases continue to fall.

While the lowest point is behind us, it’s not the time to celebrate

Larry Hu

The official purchasing managers’ index (PMIs) surveys showed that both the manufacturing and services sectors returned to growth in March, with many factories and retailers reopening as mainland authorities got the pandemic under control.