China’s factory output reached its lowest level in two years in March, according to independent data released Friday, as the country confronts the pandemic’s biggest Covid-19 epidemic since its inception.

With restrictions and lockdowns in place in important manufacturing and transportation hubs like Shenzhen and Shanghai, authorities are battling coronavirus epidemics.

The Caixin Purchasing Managers’ Index (PMI) was issued barely one day after official PMI numbers revealed that activity had declined at the fastest rate since October 2021.

PMIs are a significant indicator of factory activity in a country. Some consider the Caixin poll, which focuses on small and medium-sized businesses, to be a more realistic picture of China’s economic position than official government data, which focuses on huge state corporations.

In March, the Caixin PMI dipped to 48.1, falling below the 50-point threshold that distinguishes growth from contraction.

According to the poll, both domestic and export orders have dropped at the quickest rate since February 2020, when China was dealing with its first coronavirus outbreak.

“In March, Covid-19 flared up in several regions across China, disrupting manufacturing supply chains and impacting production,” Wang Zhe, a senior economist at Caixin Insight Group, said in a statement.

“Market demand weakened, especially for consumer goods.”

He said that the Ukraine conflict is also a cause of a sharp drop in export demand as well as the disruption of global transportation lines.

As global supply networks were disrupted, input costs climbed to a five-month high.

Faced with the risk of a significant slowdown in the world’s second-largest economy, China’s top economic planner held a meeting on Wednesday, promising to implement stabilizing policies.

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