The latest consensus forecasted said the Chinese economy is rather upbeat. It means that it must reflect expectations concerning the further stimulus measures. Nevertheless, the government’s efforts to contain viruses hampers the resumption of economic activity. There are expectations for China’s financial performance in 2020.
Nevertheless, the escalation of the coronavirus epidemic has wholly changed the consensus narrative about it. The cautious optimism followed the signing of the phase one trade deal between China and the U.S.
It has given way to acute concerns about the economy. The economy has been paralyzed with the COVID-19 for more than a month.
There might be a case of a quick resolution to the crisis, followed by a decent recovery. Nevertheless, the economy of China will still struggle to deliver growth much higher than 5 percent.
Full-year growth must be 5.8 percent. So, despite that fact, the latest Bloomberg survey forecasts that are will reflect the expectations of significant policy easing by China. Of course, stimulus measures might help the Chinese economy. Nevertheless, we must consider that their effectiveness is heavily dependent on how the Covid-19 outbreak will evolve.
The epidemic will drive China’s macro outlook. To that extent, it is encouraging to see some signs of progress in the battle against the coronavirus.
From nearly 4,000, the daily increase in infection cases in China has fallen steadily since early February. Recent changes in the methodology of diagnostic have created the data volatility but have not derailed the trend of the overall decline.
There are fewer reasons for optimism on the first point. Beijing imposed draconian restrictions. It was because the outbreak continues to hamper both the resumption of economic activity and the movement of people.
The transport ministry counted that out of 300 million migrant workers, only 80 million had returned to work, as of mid-February. Concerning the Lunar New Year travel period, overall passengers’ trips were also down 50 percent from last year.
Even in regions that are less affected by the virus, the shortage of workers has slowed the resumption of work. Although powerhouse provinces such as Jiangsu and Guangdong, and cities such as Beijing and Shanghai, have resumed work faster than other areas. Nevertheless, businesses are still very far from operating at full capacity.
Daily data on property sales, congestion, and traffic congestion confirm that trend for economic anemia, even a month into the China new lunar year.
Also, the figures about firms that have resumed to overlook the level of production within a specific factory. Some of the factories were told not to return output before March 10. Nevertheless, all other provinces have officially begun the processing to restore production. Of course, many of them are still maintaining strict checks on visitors and limiting transport to stop the spread of coronavirus.
China’s state-owned electricity utility monopoly launched an electricity resumption index last week. It was aimed to measure the number of companies that have been reopening for the business and the amount of electricity they consume. let’s hope that China will quickly find solution against the coronavirus.
- Trading Instrument