ANOTHER ECONOMIC INDICATOR has landed underlying the impact of the coronavirus SARS-CoV-2 on the economy, and why limiting the damage is becoming such a priority for Beijing.
Exports in the first two months of the year fell by 17.2%. Imports were down by 4%, implying that while raw materials were still coming in, the interruption to factory production and transport had prevented much being done with them.
Trade data for January and February should always be interpreted carefully as the Lunar New Year brings seasonal distortions. This year, the holiday was extended because of the outbreak. Nonetheless, the direction of travel for the economy seems clear and reinforces the grim message of the manufacturing purchasing managers’ index for February.
Imports from the United States rose, by 2.5% in the two months, suggesting some effort to fulfil the stipulation of the Phase One trade deal with Washington that China will buy $200 billion more US goods and services than it did in 2017. The public health emergency has made meeting that target even more of a stretch than it already was.
The question now is the pace at which demand will recover, both domestically and internationally. For China generally, if not necessarily Wuhan, the epicentre of the outbreak, and surrounding Hubei, there is a glimmer of optimism that the worst is past, with reported new cases of Covid-19 slowing. That is less so for the rest of the world as the virus continues to spread internationally.
Last week, the Ministry of Industry and Information Technology said that less than one-third of Chinas’s small and medium-sized businesses, which employ four out of five workers, had returned to normal operation.
A raft of measures to support such businesses, from the big state banks making available emergency working capital to pushing back tax deadlines, has already been introduced. Policymakers will be preparing to announce further stimulus, with employment a focus. The first-quarter GDP figures are due to be published in mid-April, so more measures are likely before then to ensure that number does not dent confidence in the Party’s economic management.