With Covid wave easing, China returns to growth

China's economic activity swung back to growth in January, official data showed yesterday, after a wave of Covid-19 infection passed through the country faster than expected following the abandonment of pandemic controls.

The official purchasing managers' index, which measures manufacturing activity, rose to 50.1 from 47.0 in December, the National Bureau of Statistics said. The 50-point mark separates contraction from growth.

Meanwhile, factories tried to retain workers over the festive period to make up ground lost to the Covid disruptions of last year.

Additionally, non-manufacturing activity, which includes the provision of services, the construction industry and catering, surged to 54.4, up 12.8 percentage points from December and above market expectations of 52.

Profits at China's industrial firms in 2022 fell 4 percent from a year earlier, official data showed. At 8.4 trillion yuan (HK$9.75 trillion), the decline compared with the 3.6 percent fall recorded after the first 11 months, bureau data showed.

China's general public budget revenue edged up 0.6 percent to 20.4 trillion yuan in 2022, including 16.7 trillion yuan tax revenue, narrowed by 3.5 percent year-on-year.

The country refunded a record 2.4 trillion yuan worth of value-added tax credits to taxpayers in 2022.

The International Monetary Fund revised China's growth outlook sharply higher for 2023, to 5.2 percent from 4.4 percent in the October forecast.

The global gross domestic product will likely expand 2.9 percent in 2023, 0.2 percentage points more than forecast in October, the fund said in Singapore in a quarterly update to its World Economic Outlook.

While that is a slowdown from a 3.4 percent expansion in 2022, the IMF said it expects growth will bottom out this year, accelerating to 3.1 percent in 2024.