China is currently operating at 83% of their previous output, while the threat of a second wave of infections lingers.
https://www.ft.com/content/43163250-808a-11ea-82f6-150830b3b99aA business activity index created by Trivium, a Beijing-based consultancy, estimates the Chinese economy is currently operating at 83 per cent of “typical output”, compared with 66 per cent in mid-March. That is welcome considering China’s predicament in February but still represents a devastating drop from what might have been expected.
Between the continued local shutdowns and fear that more will be required, and the drop in American and European export demand, things are not looking particularly optimistic for China:
For Mr Xi, there are two main dangers to this incipient recovery as China starts to go back to work. First, a resurgence of the pandemic in the world’s most populous country. And second, a collapse in demand in the US and EU.
On Tuesday, the IMF predicted the US economy would shrink 5.9 per cent this year because of its even greater struggles with coronavirus, while China will manage 1.2 per cent growth for the full year.
Chinese exporters are already bracing themselves for a fall in many of their main markets, wary that a modest recovery in shipments last month was flattered by orders that did not make it on to ships in January and February.
“External demand is one of three major economic headwinds ahead which will cause the recovery to be W-shaped instead of V-shaped,” says Larry Hu, chief China economist at Macquarie. The other two challenges, he notes, are falling property prices and deflation.
One Guangdong exporter said the global shutdown is a "death blow" to their economy. Q1 saw the worst economic contraction since Chinese record-keeping began, and I would conservatively guess the GDP drop was twice what the government says it was.
