China is slowly starting to get back to work, as it battles the coronavirus outbreak that haskilled more than 2,000 people and sickened tens of thousands.
Governmentcontrols and the fear of going outside have curtailed spending for businesses from local noodle joints and Starbucks stores to Alibaba delivery men. Only half of shopping malls in the country are open at the moment, according to the Ministry of Commerce, and factories are stillnot working due to a lack of staff, with workers trapped in their hometowns or spending two weeks in quarantine.
China’s economy was likely running at 50%-60% capacity in the week to Feb. 21, according to a Bloomberg Economicsreport. That’s better than the 40%-50% level theprevious week and is forecast to jump from Feb. 24, when the two-week quarantine periods for people who traveled over Lunar New Year are lifted.
The following data track how much of the world’s second-largest economy remains out of action:
Although some companies, especially large state-owned industrial firms and those making medical equipment, have ramped up output, demand for electricity is still well below where it should be at this time of year. Along withanecdotal reporting from across China’s vast east-coast manufacturing heartland, the power numbers suggest much of the nation’s industrial capacity remains idle.
Emissions of nitrogen dioxide in the week after the holiday were 36% below where they were at the same point after the new year break in 2019, according to theCentre for Research on Energy and Clean Air, which cited satellite data. A slowdown of 25%-50% across industrial sectors such as oil refining, coal-fired power generation and steel production contributed to the drop, according to the independent research organization.
Toyota Motor Corp. has restarted production at three of its China factories and planning to restart at the final plant from Feb. 24, according to astatement from the firm. However, all four plants will only be running a single shift, and the firm has no set date for when it expects to return to pre-virus production levels, according to spokesman Aaron Fowles.
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Asurvey of 109 American manufacturing companies in and around Shanghai showed that although almost 70% were operating in the week to Feb. 14 and more than 90% expected to be back by the week ended Feb. 21, 78% of firms said they didn’t have sufficient staff to run a full production line. A separatesurvey of sales managers at Chinese companies conducted in February reported the worst results since the data started being collected, with effects spread evenly across both the services and manufacturing sectors.
About the same number of trips by planes, trains, automobiles and boats was taken in the run up to the Lunar New Year this year compared to last year, but the fall off since the first day of the Year of the Rat on Jan. 25 was stark. On average, there was only about 20% as many trips being taken each day, meaning millions of people still haven’t traveled back to work. And with long-distance buses onlyallowed to operate at 50% capacity to reduce the risks of viral transmission, that backlog will take a long time to clear.
About 80 million migrant workers have returned to where they work, and another 120 million will return by the end of February, Liu Xiaoming, a transport ministry officialsaid in Beijing on Feb. 15. Another 100 million will return from March onwards, Liu said.
Alibaba Group Holding Ltd, the first major Chinese technology corporation to report results since the epidemic emerged in January, said the virus is undermining production and has changed buying patterns, with consumers pulling back on discretionary spending, including travel and restaurants.
That drop in discretionary spending can be seen clearly in the plunge in box office revenue this Lunar New Year.
Even if people do want to spend, many shops are shut, and online and offline retailers are facing logistical problems to supply customers. That situation may continue until the virus is contained, people are back at work and getting paid.
Retail demand for cars hascollapsed, with the outbreak keeping buyers away from showrooms. In the first week of February, an average of only 811 passenger cars a day were sold in the whole country, and sales were down 92% from the same time last year for the first two weeks of the month, according to the China Passenger Car Association. Car sales were already falling before the outbreak, but this will further undermine the whole automobile industry.
Note: Economists at Australia and New Zealand Banking Group, Nomura Holdings and Goldman Sachs Group are among those that have referred to some of these indicators in recent research. Bloomberg News will update this item as the situation continues to involve, adding data as it becomes available.
— With assistance by James Mayger, Lin Zhu, Feifei Shen, Jasmine Ng, Shirley Zhao, Aaron Clark, Yinan Zhao, Masatsugu Horie, and Matt Turner
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