Coronavirus: China's economic recovery will be long term
Beijig estimated to have lost over 180 billion euros in the first two months of the year due to pulmonary epidemic. Economic growth in sharp decline in the first quarter. Bringing workers back to factories is a priority for Chinese companies. Only 30% of the 300 million migrant workers are available.
Beijing (AsiaNews / Agencies) - The Chinese economy is struggling to recover from the effects of the coronavirus crisis (Covid-19), despite the restoration of most of the activities in the country. Zhu Min, a leading researcher at Qinghua University, and in the past deputy executive director of the International Monetary Fund (IMF), calculated that the national production system lost over 1300 billion yuan (181 billion euros) in the first two months of 2020 : 900 billion yuan (118 billion euro) in the tourism industry and the remainder in consumer spending.
The projections put Chinese growth slowing to 3.5-4% in the first quarter of the year - in 2019 it was 6%. The Beijing Ministry of Commerce expects the peak to drop in March. The economy is expected to recover in the second half of the year, an estimate also shared by the IMF. An indicator of the ongoing crisis is the collapse of the car market: 20.5% in January, and 92% in February compared to the same period of 2019, the China Passenger Car Association reports.
Medium and small businesses are the most affected, and doubly stressed by difficulty in accessing credit. An estimated 63 million are likely to close in the coming months.
The agricultural sector was also seriously affected. For example, the price of primary goods such as pork rose by 116% in January.
Experts agree that it will take time to resume full production. Bringing workers back to factories is a priority for Chinese companies. Provincial governments are easing restrictions on reopenings, especially for larger companies (with an annual income of 20 million yuan).
The movements of migrant workers (residing in rural areas, but working in urban and industrial areas) are limited by checkpoints, lack of transport and fears of contagion.
To cope with the labor shortage, some companies are even organizing charter flights and shuttle buses, are offering bonuses, producing masks and protective medical equipment themselves, and allocating facilities for the 14 days of mandatory quarantine. But according to Caixin, only 30% of the 300 million migrant workers could have returned to the factories, while production would have reached only 40% of its potential.
The distribution chain is largely out of order, with companies facing higher costs in the face of a drastic reduction in orders from abroad. In order to stimulate recover, it is anticipated that the central government will increase public spending, particularly in the health sector and in new infrastructures, at the cost of increasing the fiscal deficit.
The Chinese Central Bank has so far injected over 1000 billion yuan (131 billion euros) into the financial system. The introduction of liquidity allowed the stock exchanges to recover from the thud on February 4. The Beijing authorities are forcing banks to guarantee loans on more advantageous terms and to extend the duration of mortgages granted to businesses. The current imperative for the communist leadership is to find a balance between restarting the economy and containing the virus. Two objectives that seem badly reconciled.