Beijing (AFP)

This is a first sign of the devastating impact of the coronavirus on China: manufacturing activity collapsed in February at its lowest level ever, fueling concerns about a rout in the world economy.

The announcement comes at a time when the epidemic has already reached fifty countries, the fear of a pandemic that unscrewed Wall Street Friday to levels never seen since the global financial crisis in 2008.

Analysts already agree that Chinese economic growth will probably be very much affected in the first quarter by the coronavirus effect. In 2019, it was already 6.1% - its worst performance in almost 30 years.

The Purchasing Managers' Index (PMI) for the month of February in China therefore stood at 35.7 against 50.0 in January, the National Bureau of Statistics (BNS) announced on Saturday. A figure greater than 50 indicates an expansion of the activity. Below, it reflects a contraction.

This is well below the average forecast of analysts polled by the Bloomberg agency, which was 45.0. Sign of the extent of the fall: it is even more marked than that recorded during the financial crisis in 2008.

This poor result is largely explained by the drastic measures taken by the Chinese authorities to contain the spread of Covid-19 in the country.

Starting with the ban on entering or leaving the province of Hubei (center), the epicenter of the epidemic but also a major manufacturing center, in particular automobile.

- "Diving" -

In addition, quarantines and travel restrictions target millions of people in China. Measures that limit household consumption and make it especially difficult for workers to return to factories after the long Lunar New Year holidays.

Another element: transport being highly disturbed, the supply of spare parts and raw materials becomes difficult, obviously complicating production.

The first official indicator to be published for the month of February, the PMI gives an overview of the extent of the task to be accomplished before hoping for a return to normalcy for the Chinese economy.

This gloomy figure could especially cause new turmoil on the world stock markets, which already unscrewed Friday, investors panicking the economic consequences of the epidemic.

Wall Street closed on its heaviest weekly losses since October 2008, at the height of the financial crisis. The major Asian and European markets finished between -3% and -5%.

According to the BNS, the automotive and specialized equipment sectors were particularly affected in February in China, but the impact is still "more serious" in services.

"There has been a plunge in demand in the sectors (...) involving gatherings of people, such as transport, hotels, catering, tourism," he said in a statement.

- Growth at 2%? -

Services are based on human interactions. However, most of the Chinese stayed at home in February for fear of contracting the coronavirus. As a result, the non-manufacturing PMI, also released on Saturday, plunged to 29.6 - from 54.1 in January.

The BNS wants to be optimistic, however: the epidemic "seems to be starting to be under control, and the impact on production is gradually diminishing", he estimated.

The number of new daily cases of contamination showing a downward trend for the past ten days, the government now encourages companies to gradually return to work.

To catalyze this recovery, he announced this week a broad support plan for SMEs, encouraging banks to offer them preferential loans, and granting VAT rebates.

But "the chances of a V-shaped rebound are low, as the government is unlikely to launch a massive stimulus package," said Raymond Yeung and Zhaopeng Xing, analysts at ANZ, in a note.

The bank lowered its growth forecast for the first quarter to + 2% year on year, the latest figures "confirming that the normalization of economic activity will have to wait".

© 2020 AFP