Official: China’s economy reviving as anti-virus curbs ease
BEIJING — China’s sluggish economy is reviving as anti-virus curbs are eased and businesses in its commercial capital of Shanghai are allowed to reopen, a Cabinet official said Monday, while data showed April factory and consumer activity was even weaker than expected.
About half of the 9,000 biggest industrial enterprises in Shanghai are back at work after controls that shut down most of the city starting in late March eased, said Fu Linghui, director of statistics for the National Bureau of Statistics.
The restrictions that confined most of Shanghai’s 25 million people to their homes prompted concern global manufacturing and trade might be disrupted, adding to upward pressure on inflation in the United States and Europe. After a May 5 meeting, Ruling party officials stated that containing the outbreaks would be more important than the economy.
Anti-virus controls have shut down factories and other businesses or suspended access to industrial centers including Changchun and Jilin in the northeast and Shenzhen and Guangzhou in the south, as well as smaller cities.
Chinese leaders promised tax refunds, low cost loans, and rent free to entrepreneurs who are the country’s economic engine. However, repeated shutdowns have hampered manufacturing, retailing, and exports. Consumer spending suffers when families are kept at home due to restrictions.
Retail sales plunged 11.1% in April from a year earlier after anti-virus controls closed shops, restaurants and other consumer businesses in Shanghai, Beijing and other cities, official data showed Monday.
Manufacturing output sank 2.9% after factories closed and those that kept operating with employees living at their workplace were forced to reduce output due to disruption in supplies of components, the data showed. This has “increased downside risks” that China won’t meet its growth target for this year, Rajiv Biswas from S&P Global Market Intelligence stated in a report.
Although the government has yet to collect May data, activity seems to be improving according to “physical quantity indicators”, Fu, the statistics official. This could refer to power consumption and freight volumes. Fu stated that he believes the second quarter will continue to show good growth momentum.
Shanghai, China’s richest and most populous city, will gradually reopen shopping malls, vegetable markets, hair salons and other businesses starting Monday, the government announced. According to the official Xinhua News Agency, the number of people barred from leaving their homes is now below 1 million. Zong said Sunday the number of commercial outlets operating increased to 10,625 from a low of 1,400.
The Port of Shanghai, the world’s busiest, has said operations are normal, but official data show daily cargo volume is off 30%.
The central bank also stated that the official lower limit for interest rates on mortgages taken out by first-time homeowners will be lowered. According to the official Global Times newspaper, the policy was intended to revive slumping sales and discourage speculation that could lead to politically sensitive housing prices.
“Provided that the virus situation continues to improve, the economy should begin to rebound this month,” said Julian Evans-Pritchard of Capital Economics in a report. “But the recovery is likely to be tepid.”
National Bureau of Statistics (in Chinese): www.stats.gov.cn
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