Pandemic: China’s recovery slows down, Taiwan tops the mainland

In China, factory activity and services are down because of new lockdowns and restrictions for the Lunar New Year. Xi Jinping's strategy is threatened. GDP growth slows down in the first quarter. Meanwhile, Taiwan enjoys eight consecutive months of economic expansion and the best manufacturing numbers in eight years.

Beijing (AsiaNews) – New coronavirus outbreaks have slowed down China's economic recovery.

After seven months of uninterrupted growth, factory activity slowed down in January in mainland China, but picked up in Taiwan, where industrial output rose to its highest level in more than eight years.

In China, tThe Caixin/Markit Manufacturing Purchasing Managers’ Index (PMI), which focuses on small, private firms, dropped to 51.5 in January, below analysts’ expectations in a Reuters survey of 52.6. The 50-mark separates growth from contraction and January’s activity was the slowest pace in seven months.

Small and medium-sized enterprises are the most affected by recent travel restrictions ahead of Lunar New Year celebrations. According to the China State Railway Group, passenger numbers dropped by 70 per cent compared to a year ago.

China’s official manufacturing PMI fell more than expected to 51.3 last month from 51.9 in December, the worst January reading since 2012. The official non-manufacturing index, which measures activity in the services and construction sectors, is also negative.

For observers, these numbers highlight the fragility of China’s economic recovery after the first wave of COVID-19. A slowdown among these businesses is likely to cast a shadow over the job market, individual incomes and consumer spending, which is at the heart of Chinese President Xi Jinping’s  “dual-circulation” strategy

Asian investment bank Nomura has revised downward its forecast for China’s GDP growth in the first quarter of 2021 from +1.3 to +0.3 per cent compared to the last quarter of 2020.

The situation is different for Taiwan. In January, the PMI index reached 65.1 points, with a peak of 70.5 in transportation instruments. At 55, the level of activity in the service sector is also high.

For the island January was the eighth consecutive month of economic expansion. Unlike the mainland, analysts expect Taiwan to see further economic growth over the next six months.

Considered a "rebel" province by Communist China, Taiwan is one of the few countries that has managed the health emergency well.