By: Business Mirror, AP
China, where the coronavirus pandemic started in December, is cautiously trying to get back to business, but it’s not easy when many millions of workers are wary of spending much, or even going out.
Factories and shops nationwide shut down starting in late January. Millions of families were told to stay home under unprecedented controls that have been copied by the United States, Europe and India.
The ruling Communist Party says the outbreak, which killed more than 3,340 people among more than 82,341 confirmed cases as of Thursday, is under control. But the damage to Chinese lives and the economy is lingering.
Truck salesman Zhang Hu is living the dilemma holding back the recovery. The 27-year-old from the central city of Zhengzhou has gone back to work, but with few people looking to buy 20-ton trucks, his income has fallen by half. Like many millions of others, he is pinching pennies.
“I put off plans to change cars and spend almost nothing on eating out, or entertainment,” he said. “I have no idea when the situation will turn better.”
Factories reopened in March after President Xi Jinping visited Wuhan, the city at the center of the outbreak, in a sign of confidence the virus was under control. But the consumers whose spending propels China’s economic growth are still afraid of losing their jobs, or catching the virus. They are holding on to their money despite official efforts to lure them back to shopping malls and auto showrooms.
Data due out Friday is expected to show the economy contracted by up to 9 percent in January-March, its worst performance since the late 1970s.
That is a blow to automakers and other global companies that hope China, after leading the way into a global shutdown, might power a recovery from the most painful slump since the Great Depression of the 1930s.
“What is not fully back, or is completely missing, is the demand,” said Louis Kuijs of Oxford Economics.
In Europe, the first tentative steps at winding back economically crippling restrictions were also running into resistance, as shoppers stayed away from the few stores that were reopening and some workers feared the newly restored freedoms could put their health at risk. The streets of Rome were largely deserted despite an easing of restrictions this week that allowed some businesses to reopen.
In China, e-commerce got a boost when families stuck at home bought groceries and other items online. But forecasters expect little to no growth in this year’s total spending on clothing, food and other consumer goods.
Some cities have resorted to handing out shopping vouchers and trying to reassure consumers by showing officials on state media eating in restaurants. Consumption is a smaller share of China’s economy than in the United States and other high-income countries but accounted for 80 percent of last year’s growth.
Read full story HERE.