context: Facing severe economic slowdown inflicted by COVID-19, Beijing 'miraculously' contained the rapid spread of the virus and hustled its people and companies back to work. Still determined to meet set growth targets, more stimulus policies are expected to boost infrastructure investment and consumption.
Following a 13 Mar 2020 NDRC (National Development and Reform Commission) opinion, State Council on 18 Mar 2020 elaborated on consumption stimulus policies. Local governments in Jiangxi, Hunan, Jiangsu, and Zhejiang all issued documents encouraging spending.
COVID-19's negative impact on the economy is short-term, with the situation gradually improving as policies take effect, says Wang Bin 王斌 Ministry of Commerce. Lauding release of consumption vouchers in some localities, Ha Zengyou 哈增友 NDRC suggests such policies should consider local fiscal capacity and bring real benefits to the people.
Hospitality and other service industries are hurt by COVID-19
- National Bureau of Statistics (NBS) data show nationwide catering industry revenue dropped by 43.1 percent in Jan-Feb y-o-y. There was a C¥500 bn loss every 7 days, according to 21st Century Business Herald
- tourism was also hit hard, but as of 16 Mar 2020, over 30 percent of 3714 A-rated sites nationwide resumed business, and online tourism platform Qunar data showed recovery throughout the industry
- garment consumption dropped, says Ai Guoyong 艾国永 Macondo, with Jan-Feb sales abysmal, but beginning to improve in March
Hua Changchun 花长春 Guotai Junan says people were more prudent consumers during the lockdown, but suppressed demand would recover.
Scrap steel prices increased slightly as infrastructure and real estate construction slowly resumes, reports 21st Century Business Herald, with automobile and real estate sales rebounding from consumption stimulus policies and interest rates staying low. Liu Xuezhi 刘学智 Bank of Communications points out infrastructure investment would rebound thanks to expanding special-purpose bonds.
Mao Shengyong 毛盛勇 NBS says macroeconomic policies serve as hedge against internal and external risks.