Chinese Exporters on Track to Normalizing Production But Face Headwinds Abroad
Chinese exporters are on track to resume full operations but face weakening external demand and falling orders as the coronavirus pandemic disrupts global production and consumption, an official at the country’s commerce ministry said Thursday.
China’s exports plunged 17.2% in the first two months of 2020 from the same period a year earlier. That compared with December’s 7.6% on-year increase and marked the sharpest contraction in nearly a year. The bigger-than-expected fall came after Beijing locked down cities across the country in January, restricting travel and ordering prolonged factory shutdowns that nearly ground the world’s second-largest economy to a halt.
Two-thirds of exporters outside of Hubei Province, the epicenter of China’s outbreak, are back to more than 70% of their normal production capacity as the government moved to revive the economy, Jiang Fan, an official at the commerce ministry’s foreign trade department, said at a briefing Thursday.
Service providers bore the brunt of the economic fallout and prevention control measures, slowing the resumption of normal operation, commerce ministry officials said at the briefing.
Only 60% of service companies had resumed work as of Monday, falling short of the 95% resumption rate at big industrial companies. Dine-in restaurants and other businesses in the service sector are still restricted as the nature of their services requires direct interaction with consumers, the officials said. A drop in foot traffic and difficulties getting staff back to work made many service providers reluctant to restart business, they said.
China’s economic activity fell across the board in January-February, promoting another round of downward revisions on its growth estimates for 2020. Economists widely forecast a single-digit on-year contraction for at least the first quarter.
Beijing is under increased pressure to realize its planned political goals of doubling the size of the economy by the end of the year from a decade ago.
The commerce ministry officials said at Thursday’s briefing that the country will face challenges in attracting foreign direct investment this year given reduced global investment amid the pandemic. The shocks dealt by the coronavirus are also making it hard for the Communist Party to realize its goal of eliminating poverty by the end of the year as farmers struggle to sell agricultural goods due to the transportation limits imposed to contain the virus.
Source: Dow Jones