China's Economic Activity Picked Up In March

China's Economic Activity Picked Up In March

almost 4 years ago2 mins

China’s economic activity roared back like a steam train in March, if Tuesday’s survey data is anything to go by 🚂

What does this mean?

The regular surveys – which ask purchasing managers how busy they’ve been each month – showed activity in the country’s manufacturing sector climbing in March, despite economists’ expectations it would continue to shrink after February’s record low. That could be because 95% of Chinese factories had reportedly reopened by the middle of the month. And it wasn’t just the machines: China’s non-manufacturing activity unexpectedly perked up last month too.

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Despite the improvements, investors praising China’s economic recovery may be jumping the gun. Remember, these surveys track how busy companies have been partly in anticipation of future demand for their products. In other words, increased activity doesn’t necessarily lead to an immediate surge in demand, whether domestic or – with many countries still in lockdown and curbing their spending – international 🌎

Why should I care?

Chinese telecoms giant Huawei revealed on Tuesday that its 2019 profit hadn’t grown by as much as it’d promised. That might have something to do with its blacklisting in the US last year, which saw several American companies barred from trading with the firm. If that ban isn’t revoked, the company says this year could be its toughest yet. At least Huawei’s expecting sales of its smartphones – particularly its new 5G-enabled phone 📱 – to recover as people return to work in China, where it made around 40% of its earnings last year.

Huawei’s pace of profit growth in 2019 was its slowest in three years | The Wall Street Journal
Huawei’s pace of profit growth in 2019 was its slowest in three years | The Wall Street Journal

Commodity investors might be relieved when China’s economy gets back to firing on all cylinders again too 🛢 China’s the world’s largest oil importer – and between the country’s drop in demand and Russia and Saudi Arabia’s price war, oil’s price has fallen by its most ever in a single quarter. Investors and oil producers who want that price to rebound might be hoping renewed demand from China will help.

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