A view from China – Employment predicted to remain at pre-lockdown levels

Shanghai nighttime cityscape

As countries around the world reel under the impact of Covid-19 on their economies and market, a modest recovery has begun in China since the infection rate stabilised in April. 

On the ground, overall business sentiment has steadily been reported as optimistic. In large to medium-sized enterprises, the labour resumption rate was 97%, while for small and mid-sized organisations, the figure is 91%. 

Among the industries that have picked up momentum since the shutdown are property construction and infrastructure (resumption rate 93%), followed by industrial services (90%). Even in sectors that have been heavily hit, such as hospitality and tourism, the rate hit 87%.

Indeed, the employment figures in China are estimated to remain the same as pre-COVID 19 shutdowns, suggesting any pressure to downsize workforces have not been overwhelming. 

Factory reopen rate reached above 90% nationwide and production has resumed normal levels. The domestic industrial supply chain has quickly recovered, reversing the trend of sluggish manufacturing profits in the past three months. 

Investment and consumption creep up

Compared with the drop during the peak of the pandemic period, industrial and investment data shows a significant upward trend. The stable pricing reflects the restart and continuation of a virtuous cycle, a trend reinforced by the fall in crude oil prices. 

While overall consumption remains modest, since the lockdown restrictions have eased offline consumption has picked up volume, though sectors such as autos, home appliances, and travel remain weak.  

According to the latest China Government work report, delivered at the opening of the third session of the 13th National People’s Congress (NPC), the country has vowed to finish building a moderately prosperous society in all respects and win the battle against poverty in 2020. 

The strategy adopted by the leadership, for now, is to avoid setting specific growth targets, helping China concentrate on keeping the fundamentals of the economy stable.

Sources: Economic Daily, Huanqiu, ECNS, CAA

Candice Zhao, Senior Associate – Research (Shanghai)

POSTSCRIPT: This blog was written before the recent coronavirus spike in Beijing. We hope to post updates once a clearer picture emerges.