Private Gauge of Chinese Manufacturing Activity Showed Contraction in April

Chinese factory activity grew at a slower pace in April as demand remained sluggish while the world grapples with the COVID-19 pandemic, according to official data released on Thursday.

Do these two numbers reflect the full picture of the economy?

ING chief economist for Greater China Iris Pang said that the latest PMI figures indicate China's trend toward recovery still faced uncertainty. The Western world has yet to relax some of its city lockdowns.

The NBS data also found that almost 60 percent of companies surveyed reported "insufficient orders" and Zhao said some manufacturing companies reported a sharp decrease in newly signed export orders, while some orders that had already started production had been canceled.

The official non-manufacturing Purchasing Managers' Index (PMI) rose to 53.2, from 52.3 in March, China's National Bureau of Statistics said on Thursday.

Combined with quickly solidifying plans for the China-backed Regional Comprehensive Economic Partnership (the rival trade deal to the Trans-Pacific Partnership), Beijing is poised to increase its economic influence in the front of global trade. This will hit employment and wages and therefore domestic demand.

Expansion was also seen in business activities in the information transmission software and technical services, showing that new growth drivers have further propped up China's economic recovery and consumption growth. With the coronavirus under control domestically, China's economy has begun to open up again as authorities loosen lockdown restrictions including stay-at-home orders.

For the time being, we keep our forecasts for China's 2Q20 and full-year GDP at -3.1% YoY and -1.5%, respectively, due to strict social distancing measures and weak global demand.