China manufacturing slumps as anti-virus controls bite

China’s manufacturing plunged in February as anti-virus controls shut down much of world’s second-largest ecomy, but companies are confident activity will revive following government stimulus efforts, according to two surveys.

data d to growing signs of disease’s cost. Global stock markets have tumbled more than 10% since mid-February as outbreaks in Iran, Italy and South Korea fueled fears virus’s impact will spre.

Chinese factory activity fell at its fastest rate and to its lowest level on record as anti-disease efforts closed factories and disrupted supplies, according to surveys by a business magazine, China’s statistics ncy and an industry group.

A monthly purchasing manrs’ index released Monday by Caixin magazine fell to 40.3 from January’s 51.1 on a 100-point scale on which numbers below 50 show activity contracting.

Despite that, business confidence rose to a five-year high after ruling Communist Party launched efforts to revive industry with tax cuts and or aid, Caixin said.

“Manufacturers were confident that output would rise over next year,” magazine said in a statement.

A separate PMI released Saturday by National Bureau of Statistics and China Federation of Logistics & Purchasing fell to 35.7 from January’s 50.

group of companies covered by Caixin survey, begun in 2004, has more private companies and exporters. survey by NBS and logistics federation, carried out since 2002, has more state-owned enterprises that serve China’s domestic market.

Both surveys came in well below ir previous record lows following 2008 global financial crisis.

government extended Lunar New Year holiday to keep factories and offices closed.

Shock waves spre through Asia and or suppliers of components and raw materials as demand from Chinese factories that assemble most of world's smartphones, toys, home appliances and or consumer goods plummeted.

Communist Party is trying to revive business activity in some parts of China while ordering areas deemed at high disease risk to stay focused on fighting virus. Beijing has cut a key interest rate and promised tax breaks, low-cost loans and or aid. Local officials have orders to help millions of employees get back to work while preventing a rebound in infections.

Chinese officials have expressed confidence ruling party's annual ecomic growth targets can be met despite disruption.

Ecomic growth fell to a multi-dece low of 6.1% last year. Forecasters alrey expected this year's growth to decline below 6%. y say longer it takes to control virus, bigger stimulus will have to be to hit official growth targets. That might push up alrey high debt levels.

Most access to Wuhan, a manufacturing hub with 11 million people where disease first emerged, was suspended Jan. 23. Controls on travel spre to cities with a total population of 60 million and restaurants, shops, cinemas and or businesses nationwide were ordered to close. Sales of autos and real estate fell close to zero.

Some industries, including state-owned steel and copper mills, operated at rmal levels throughout shutdown, helping to buoy official activity reing.

Manufacturing activity rmally would rebound in February as factories reopen and replenish raw materials following Lunar New Year, when many shut down for two weeks or more.