China’s economy expected to recover by end of May, analysts say

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Customers shop at a Sam’s Club warehouse store in Beicai Town, Pudong New Area, east China’s Shanghai, May 2, 2022. (Xinhua/Chen Jianli)

As recent COVID-19 outbreaks have weighed on China’s economy which is already under pressure from falling demand, impacting supply and weakening expectations, the scientific approach of China’s balancing the fight against viruses and economic development would help the economy take a new look at the May Day holiday.

Other policies are being prepared to revive economic activities by boosting consumption and further resuming industrial production in areas affected by the epidemic.

Due to the strict anti-pandemic measures taken across the country, especially in Shanghai which is under varying degrees of lockdown, the country’s consumption in many service sectors, from tourism to the film industry, has been severely limited during the five-day April holiday from May 30 to May 4, usually an important opportunity for businesses to generate revenue.

During the five-day holiday (April 30 to May 4), a total of 160 million people traveled in the country, down 30.2 percent year-on-year, according to data from the Ministry of Culture and Tourism. published on Wednesday. Meanwhile, the domestic travel business generated revenue of 64.68 billion yuan ($9.8 billion) during the holidays, down 42.9 percent year-on-year.

China Railway data showed some 32 million passengers traveled by train from April 28 to Thursday, with total passenger numbers at low levels. Meanwhile, data from the Civil Aviation Administration of China showed the number of holiday air passengers fell 77% year-on-year to 2 million.

Meanwhile, the country’s total box office revenue came in at 140 million yuan ($21.18 million) in the first two days of the holiday, down nearly 83% year-on-year. the other, according to data from the Maoyan ticketing platform.

However, despite a short-term impact on economic growth, targeted anti-pandemic efforts to quickly cut chains of transmission have left more room for China to suppress several epidemics in the best interests of the people, with measures practices refined to reduce economic and social development impacts as much as possible, the experts noted.

“As epidemic-hit Shanghai has achieved the goal of eliminating COVID-19 cases at the community level, we can expect a[n] [economic] recovery from the end of May,” Cao Heping, an economist at Peking University, told the Global Times on Wednesday. He said China’s industrial and financial hub is expected to rebound quickly once the outbreak in Shanghai is brought under control. control, given the enormous economic vitality of the city.

A balanced act

With the epidemic situation in Shanghai easing, local authorities rushed to roll out a package of measures to reduce burdens on businesses and ensure undisturbed supply chains to support agricultural and industrial recovery.

At present, the production resumption rate in Shanghai’s agricultural sector has exceeded 93 percent, while that of the vegetable segment has reached 98 percent, Ye Junping, an official with the agriculture department, said Wednesday. and Shanghai Rural Affairs at a press briefing. Seeds, fertilizers and agricultural machinery, among others, needed for spring plowing are already in place, providing a solid foundation for this year’s harvest, the official said.

In addition, China has established a “whitelist” approach to support the resumption of work of key enterprises to minimize the impact of COVID-19 on the supply chain.

With the whitelist, Shanghai has allowed 1,854 companies to resume operations, with key companies like SAIC Motor and US automaker Tesla seeing assembled cars roll off production lines while the production capacity of major semiconductor makers SMIC and Hua Hong Semiconductor is running at over 90%.

“Although there are many solutions to economic problems, the key is to effectively control resurgences of COVID-19 as soon as possible for the immediate resumption of normal economic and social activities. This is what the Beijing local government is doing. “Wang Guangfa, a Beijing-based respiratory expert, told the Global Times on Wednesday.

Since the worst outbreak in two years hit Shanghai, recent spikes in sporadic cases in Beijing have drawn a lot of attention, with all eyes on the Chinese capital to see if the situation will deteriorate as it has in Shanghai, and how economic activities would be affected during the May Day holiday.

The lesson learned from Beijing’s experience is to adopt precise anti-epidemic measures and dynamically adjust containment coverage according to the emergence of confirmed cases, Wang said. He noted that the epidemic situation in Beijing is reassuring as there are only about 50 new cases reported every day, most of them already in controlled areas.

Cao said Beijing can serve as a model for other cities to balance anti-epidemic work and the economy by moving economic activities offline to online to increase the supply of contactless services.

Beijing on Wednesday announced the extension of the suspension of catering services for all restaurants, after multiple infections were explicitly linked to restaurants in the city.

Although this is a blow to the already struggling food and restaurant industry, it has helped boost take-out and delivery sales. Alibaba’s fresh food chain Hema Fresh told the Global Times that sales of takeaway roast foods on the platform doubled year-on-year on Sunday, with prepared kebabs and steaks top sellers during the holidays.

People line up for a swab test to be tested for the Covid-19 coronavirus near the entrance to the Forbidden City in Beijing on May 1, 2022. Photo: CFP

People line up for a swab test to be tested for the Covid-19 coronavirus near the entrance to the Forbidden City in Beijing on May 1, 2022. Photo: CFP

Aggressive policies expected

In addition to striking a balance between coronavirus suppression and economic development amid sporadic outbreaks of the highly infectious Omicron variant, experts have noted that more macroeconomic measures, particularly fiscal stimulus, are needed to strengthen the confidence of businesses and residents.

A meeting of the Political Bureau of the Communist Party of China Central Committee on April 29 said established policies will be quickly implemented, including tax refunds and reductions, fee reductions and a range of monetary policy tools. . In addition, additional goal-oriented policies will be designed and implemented in a timely manner and given some flexibility.

Employment is crucial for stable economic growth, and to that end, consumption must be effectively stimulated, said Li Xunlei, chief economist at Zhongtai Securities. He called for the issuance of consumption coupons to stimulate consumption and, therefore, stimulate production.

In addition to targeted consumption coupons given to low-income groups, the central government may issue general consumption coupons worth a total of about 1.4 trillion yuan to residents, “the sooner the better”, said noted Li.

Several localities in China have already issued coupons and digital “red envelopes” among a variety of benefits. The tech hub of Shenzhen in south China’s Guangdong Province, which has just emerged from recent COVID-19 outbreaks, issued a total of 500 million yuan worth of coupons from Thursday, one of the largest sums announced by a Chinese city to date.

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