Explainer | China manufacturing: everything you need to know
- China is the world’s largest manufacturer in terms of output and has earned a reputation as the ‘world’s factory’
- China’s two purchasing managers’ indices (PMIs) are indicators of the economic health of the economy, gauging sentiment in the business sector
China is the world’s largest manufacturer in terms of output and has gained a reputation as the “world’s factory” soon after its accession to the World Trade Organization (WTO) in 2001.
Lured by cheap labour, China’s commitment to opening up its economy, and low tariff access to Western markets, all due to its WTO entry, foreign firms and investors rushed to do business in the world’s most populous country in the new millennium.
Aided by state investment, China has since become a world leader in the manufacture of steel, car parts, chemicals, electronics, and robotics.
How is the performance in China’s manufacturing sector measured?
China’s two purchasing managers’ indices (PMIs) are indicators of the economic health of the economy, gauging business sentiment in the sector.
The official PMI released by the National Bureau of Statistics largely measures the sentiment among larger firms, many of which are state-owned.
The PMI produced by Markit for Caixin magazine largely measures sentiment among smaller, mostly private firms.
The indices are compiled from surveys of business owners and supply-chain managers, gauging changes in production, new orders, employment and delivery times, among other metrics.