China’s Economy Poised for Spring Recovery
As the worst of the latest wave of Covid-19 passes in China, the country’s economy is expected to bounce back strongly in the spring. Data from subway and road traffic shows that people are returning to the streets of major cities, indicating that the virus is under control. Cities like Guangzhou and Sanya have already passed the peak of the latest wave. According to Larry Hu, Chief China Economist at Macquarie, China’s ability to shift its Covid-19 policy quickly has allowed for a deeper short-term economic contraction and a faster reopening and recovery. With daily visits to fever clinics in Chongqing dropping significantly, it appears that China may be able to live with the virus by the end of March.
China’s Cities See Increased Traffic, Mixed Economic Outlook
Despite a recent surge in traffic, China’s cities still feel the pandemic’s effects. Baidu traffic data shows that Chongqing was the most congested city in mainland China during Thursday morning’s rush hour, with increased traffic also seen in Beijing, Shanghai, Guangzhou, and other major cities. While subway ridership in these cities has risen significantly from its recent lows, it has only recovered to about two-thirds of last year’s levels. However, there is some hope on the horizon. A Caixin survey of services businesses in December found that they were the most optimistic they had been in about 18 months, with the business activity index rising to 48 in December. While this reading still indicates a contraction in business activity, the index for a separate Caixin survey of manufacturers edged up to 49 in December, the highest it has been in ten months.
Covid Wave to Affect Major Chinese Cities by End of 2022
According to a study conducted by Shanghai medical researchers, the latest wave of Covid-19 is expected to pass through major Chinese cities by the end of 2022, while rural areas and provinces in central and western China will likely see infections in mid-to-late January. The researchers warn that the Spring Festival, which sees hundreds of millions of people traveling throughout the country, could dramatically increase the duration and magnitude of the outbreak. They also express concern about the lack of medical resources and intensive care units in rural areas, which puts senior citizens, particularly those with underlying health conditions, at higher risk of severe illness from the highly transmissible omicron variant. While Oxford Economics Senior Economist Louise Loo is cautious about a rapid rebound in China’s economy, the firm predicts that China’s GDP will grow by 4.2% in 2023.
Shanghai medical researchers have warned of the possibility of multiple Covid-19 outbreaks in China, with new surges expected in late 2023. The World Health Organization has called for more timely and reliable data from China, including information on hospitalizations, deaths, and real-time viral sequencing. China is set to lift many of its Covid-19 restrictions, including the quarantine requirement for inbound travelers and the ban on leisure travel abroad, on Sunday.