China's factories were hit harder this quarter than last year as Covid drags on, survey says

cnbc.com:

BEIJING — Manufacturing, one of the main drivers of China's growth since the pandemic began, saw slower growth in the first quarter, according to an independent survey by China Beige Book.

It's another sign that China's economy may not benefit as much from overseas demand as Covid control policies diverge. China's use of swift lockdowns in early 2020 helped the country quickly reopen businesses while much of the world struggled to contain the virus and resume normal business activity.

However, more countries have adopted a «live with Covid» strategy in the last several months. China has generally maintained a «zero-Covid» policy, although policymakers have tried targeted measures to keep ports or large factories running.

«Until recently, the China-during-Covid story has been heavy reliance on production and exports, even as consumers largely stayed home,» U.S.-based China Beige Book said in a report Tuesday. «This quarter highlights the potential limits of that reliance.»

The firm surveyed more than 4,300 businesses in China, mostly in the month through March 16. The report is an early look at the first quarter, which isn't over yet, and only included proprietary trend analysis.

Retail businesses saw double-digit year-on-year declines in the rate of revenue and profit growth, as well as a slowdown in hiring, the China Beige Book survey found.

«Manufacturing is clearly in better shape but revenue, profit, and new domestic order growth are all slower than Q1-2021,» the report said.

Official figures from the National Bureau of Statistics of China released earlier this month showed surprisingly upbeat data for January and February, with faster-than-expected growth in retail sales, industrial production and fixed asset