BEIJING, Jan 13 (Portal) – Chinese residents are increasingly on the move after last month’s sudden reversal of severe COVID-19 restrictions despite a surge in infections in the country, suggesting a gradual recovery in consumption and economic activity this year suggests.
Mobility and spending data — from subway passenger traffic in three of China’s largest cities to flight volume to box office receipts — show a surge since late December, after Beijing abruptly ended the three-year “zero-COVID” policy earlier this month.
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However, some indicators show that activity has not yet fully recovered to levels seen a few months ago, and many economists remain cautious about the pace of the rebound after faster-than-expected reopening.
“The decline in retail spending has been increasingly broad-based, suggesting it will take time to reverse the negative psychological impact on Chinese consumers caused by three years of episodic lockdowns,” said Louise Loo, senior economist at Oxford Economics .
COVID-related lockdowns and restrictions have impacted travel, cinema admissions and car purchases this past spring and again at the start of winter, data from information providers and industry bodies showed.
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In addition, Loo said a swift recovery will also be hampered by shifts in households’ liquidity positions as the pandemic progresses.
“Unlike the direct cash-out schemes in Hong Kong and Singapore, which provide some support for household spending, China’s COVID relief programs have instead focused overwhelmingly on helping businesses hit by lockdowns,” she said.
Policymakers have promised to boost demand this year, particularly consumption.
But spending in other major economies has lost momentum on rising interest rates aimed at taming inflation, hurting China’s exports, which have been a rare bright spot for its economy during the pandemic period.
An official factory activity survey found that a sub-index of new export orders remained in contraction territory for 20 straight months. The number fell to 44.2 in December from 46.7 in November. The 50-point mark separates contraction from growth on a monthly basis.
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Employment in the massive manufacturing sector is also under pressure, according to the survey, likely due to subdued output levels and difficulties in sourcing labor amid the virus outbreaks, analysts said.
Economists expect the world’s second largest economy to pick up again from the second quarter, supported by stronger consumption and higher government spending on infrastructure projects. But a recovery in the country’s competitive real estate market could take much longer.
Graphics by Kripa Jayaram, Riddhima Talwani and Sumanta Sen; Reporting by Ellen Zhang and Kevin Yao; Edited by Kim Coghill
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