Containers and trucks at Qingdao Port, China, on February 14, 2019.
Reuters
BEIJING – China has not fully recovered from the shock of the coronavirus pandemic, business leaders said in a poll released Tuesday by the book Beige China.
After about a year since Covid-19 first emerged in the Chinese city of Wuhan, about two-thirds of executives surveyed by the third firm said they do not expect sales, profitability and hiring to return to levels from 2019 to at least three in a few months.
China Beige Book conducted more than 3,300 interviews between November 12 and December 11 in its latest quarterly business activity survey.
Credit problems and trade tensions
For the fourth quarter, China Beige Book recorded sharp falls in growth in sales of luxury goods, food and clothing compared to the previous quarter.
“Companies in these subsectors noted lower margins, as well as weaker sales volume and hiring growth,” the report states.
This contrasted with the better performance of car dealers and sellers of furniture and appliances, indicating that richer households could increase overall consumption by spending on high-end items, the beige book noted.
Creditors were also more concerned about retail companies. Although the loan rejection rate remained fairly stable among most sectors (around 10% to 20%), that of the retail industry rose to 38% in the fourth quarter, according to the report.
Domestic demand is a key part of Beijing’s plan for sustainable economic growth in the coming years. China has tried to rely more on its own consumers for growth than on exports, especially amid tensions with major trading partners such as the US
China remains a bright spot, but has tentative prospects
In the services sector, the China Beige Book also found that fourth-quarter earnings were not driven by consumers, but by industries that meet business needs such as telecommunications, shipping, and financial services.
The chain restaurants did not experience as much growth, while travel did not experience any growth and the hospitality industry recorded the weakest revenue, according to the report.
The beige book also noted that compared to an increase in exports, China’s imports have stagnated since the initial recovery from the first quarter shock.
The Chinese market remains a bright spot for companies around the world after the country was able to control the outbreak nationwide and return to global growth in the second quarter.
But the scattered cases of Covid-19, most recently in the capital Beijing in the past two weeks, as well as the persistent spread of the virus abroad, make the pandemic an uncertainty for Chinese authorities and companies.
China’s full-year economic data for 2020 will be released on January 18, according to the National Statistics Office’s website.