After becoming the only major economy to record positive growth in 2020, China’s recovery from the coronavirus pandemic appears to have plateaued this year, with lockdown measures to control virus outbreaks in the north expected to drag on first quarter output, according to new business surveys and analysts.

However, the loss of economic steam could allay some market concern that Chinese policymakers were primed to roll back monetary stimulus measures too quickly.

The Caixin/Markit Manufacturing Purchasing Managers’ Index (PMI), which focuses on small, private firms, dropped to 51.5 in January, below analysts’ expectations in a Reuters survey of 52.6. The 50-mark separates growth from contraction and January’s activity was the slowest pace in seven months.
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