Covid-19 impact: China's Jan-Feb economic activity worse than expected

Topics China economy | China | Coronavirus

China's consumer spending and other business activity fell even more than expected in January and February due to its virus outbreak, adding to the ruling Communist Party's challenges as it tries to revive the world's second-largest economy.

Retail sales fell 20.5 per cent from a year earlier after shopping malls and other businesses were closed in late January, government data showed Monday. Factory output declined by a record 13.5 per cent after the Lunar New Year holiday was extended to keep manufacturers and offices closed.

The data were even bleaker than economists expected. They warned manufacturers and others will struggle despite official efforts to reopen factories and other businesses in many areas while preventing a new spike in infections.

This is not the end of the nightmare. Watch out! wrote economist Iris Pang of ING in a report.

The ruling party has eased some controls and allowed factories and some other businesses to reopen in many areas. But companies and economists say it will be months before activity returns to normal levels.

ALSO READ: Coronavirus LIVE

They say that might be pushed back further because the United States and European governments are imposing travel and other curbs that will depress demand for Chinese exports.

The latest data point to an even deeper contraction this quarter, said Julian Evans-Pritchard of Capital Economics in a report.

The March data are likely to be even worse, said Evans-Pritchard.


The January-February period looks better because it includes the start of January, before anti-virus controls hit, said Evans Pritchard.

Further ahead, the pace of recovery is likely to remain slow, he said. The global spread of the virus will hold back the rebound in exports, even as factories return to normal operation. Investment by private businesses tumbled 26.4 per cent while commercial real estate sales plummeted 39.9 per cent, the National Bureau of Statistics reported.

Dear Reader,

Business Standard has always strived hard to provide up-to-date information and commentary on developments that are of interest to you and have wider political and economic implications for the country and the world. Your encouragement and constant feedback on how to improve our offering have only made our resolve and commitment to these ideals stronger. Even during these difficult times arising out of Covid-19, we continue to remain committed to keeping you informed and updated with credible news, authoritative views and incisive commentary on topical issues of relevance.

We, however, have a request.

As we battle the economic impact of the pandemic, we need your support even more, so that we can continue to offer you more quality content. Our subscription model has seen an encouraging response from many of you, who have subscribed to our online content. More subscription to our online content can only help us achieve the goals of offering you even better and more relevant content. We believe in free, fair and credible journalism. Your support through more subscriptions can help us practise the journalism to which we are committed.

Support quality journalism and subscribe to Business Standard.

Digital Editor

Business Standard is now on Telegram.
For insightful reports and views on business, markets, politics and other issues, subscribe to our official Telegram channel