Chindia Alert: You’ll be Living in their World Very Soon
aims to alert you to the threats and opportunities that China and India present. China and India require serious attention; case of ‘hidden dragon and crouching tiger’.
Without this attention, governments, businesses and, indeed, individuals may find themselves at a great disadvantage sooner rather than later.
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Beijing’s Chaoyang district remains the last high-risk area in China, with virus preventive measures continuing to impact on travel and shopping plans
China faces the dilemma of preventing a re-emerge of the pandemic, while also pushing to get its economy back to normal
China’s continued pandemic prevention measures, coupled with still hesitant consumer demand, will inevitably lead to persistent limitations on the nation’s economic recovery, analysts said. Photo: Bloomberg
After nearly three months of being quarantined by herself in Beijing, Mary Zhao was looking forward to the upcoming long weekend at the start of May to be able to finally reunite with her parents.
But Zhao was forced to abandon her plan for the Labour Day holidays as Beijing’s upmarket Chaoyang district, where she lives, remains the only high-risk zone for coronavirus in the entire country.
If she travelled the five hours by car, or two hours via bullet train, to the neighbouring Hebei province, she would first have to undergo a 14-day quarantine before seeing her parents. Her parents would also have the same two week quarantine to look forward to once they returned home if they came to visit their daughter in Beijing.
These strict controls to prevent a re-emergence of the coronavirus outbreak are making a return to normal life impossible for many, and mean the final economic and social cost
from China’s draconian preventive measures could be much larger than expected.
Wuhan declares ‘victory’ as central Chinese city’s last Covid-19 patients leave hospital
It underscores the dilemma facing China’s leaders on how to balance the need to
and to avoid a fresh outbreak. On the surface, China may be able to declare victory as even Wuhan, the city where the virus was first detected, announced that the last Covid-19 patient had left hospital on Sunday. But fears of a renewed outbreak have kept the country’s cinemas and most schools closed, with travel between provinces discouraged.
China’s national borders also remain largely closed, with flights being cut to a minimum, and a mandatory 14-day quarantine for every arrival. In the number of places where new cases have been reported, quarantine requirements have been tightened, including Harbin and a few other cities near the border with Russia.
Chaoyang, the home to one of Beijing’s main business districts and most foreign embassies, changed its risk rating to high from low in the middle of April after three new cases were reported, dealing a fresh blow to the district’s
and forcing many of the 3.5 million residents to cancel their travel plans.
On the outskirts of Beijing, near Beijing Capital International Airport, returning migrant workers to Picun village were ordered to stop at entrance and could only be escorted inside by their landlord, with many villages and residential compounds remaining closed to outsiders.
In the high-end shopping district of Guomao, some shops also remain closed as there are few potential customers, while over in the popular Sanlitun area, metal barriers restrict access and temperature checkpoints are still required.
The landmark Apple Store in the popular Taikoo shopping centre is open, but with limited customers allowed inside, there are long queues outside. Customers are required to scan a QR code to check their movements over the last few days before entering.
Coronavirus: More schools reopen in China for students preparing for university entrance exams
“Why do I have to spend 20 minutes just to get into the Apple Store? The sun has almost melted me down,” one visitor complained to the security guards at the front of the shop.
China’s continued pandemic prevention measures, coupled with still hesitant consumer demand, will inevitably lead to persistent limitations on the nation’s economic recovery, analysts said.
Ernai Cui, an economist at research firm Gavekal Dragonomics, said on Monday that China’s cautious approach to lifting restrictions “points to a weak second quarter for consumer services”, adding additional pressure to the economic recovery.Mao Zhenhua, a researcher at the China Institute of Economics at Renmin University, said China’s preventive measures will inevitably be a drag on production, employment and exports.
BEIJING (Reuters) – China’s factory activity likely rose for a second straight month in April as more businesses re-opened from strict lockdowns implemented to contain the coronavirus outbreak, which has now paralysed the global economy.
The official manufacturing Purchasing Manager’s Index (PMI), due for release on Thursday, is forecast to fall to 51 in April, from 52 in March, according to the median forecast of 32 economists polled by Reuters. A reading above the 50-point mark indicates an expansion in activity.
While the forecast PMI would show a slight moderation in China’s factory activity growth, it would be a stark contrast to recent PMIs in other economies, which plummeted to previously unimaginable lows.
That global slump, caused by heavy government-ordered lockdowns, as well as the cautious resumption of business in China, suggests any recovery in the world’s second-largest economy is likely to be some way off.
“The recovery so far has been led by a bounce-back in production, however, the growth bottleneck has decisively shifted to the demand side, as global growth has weakened and consumption recovery has lagged amid continued social distancing,” Morgan Stanley said in a note.
“The expected slump in external demand has likely capped further recovery in industrial production.”
The latest official data showed 84% of mid-sized and small business had reopened as of April 15, compared with 71.7% on March 24.
Hobbled by the coronavirus, China’s economy shrank 6.8% in the first quarter from a year earlier, the first contraction since current quarterly records began.
That has left Chinese manufacturers with reduced export orders and a logistics logjam, as many exporters grapple with rising inventory, high costs and falling profits. Some have let workers go as part of the cost-cutting efforts.
A China-based brokerage Zhongtai Securities estimated that the country’s real unemployment rate, measured using international standards, could exceed 20%, equal to more than 70 million job losses and much higher than March’s official reading of 5.9%.
Sheng Laiyun, deputy head at the statistics bureau, said on Sunday migrant workers and college graduates are facing increasing pressures to secure jobs, while official jobless surveys show nearly 20% of employed workers not working in March.
Chinese authorities have rolled out more support to revive the economy. The People’s Bank of China earlier in April cut the amount of cash banks must hold as reserves and reduced the interest rate on lenders’ excess reserves.
BENGALURU (Reuters) – The Indian economy is likely to suffer its worst quarter since the mid-1990s, hit by the ongoing lockdown imposed to stem the spread of coronavirus, according to a Reuters poll, which predicted a mild and gradual recovery.
Over 2.6 million people tmsnrt.rs/3aIRuz7 have been infected by the coronavirus worldwide and more than 180,000 have died. Business and household lockdowns have disrupted supply chains globally, bringing growth to a halt.
The April 17-22 Reuters poll predicted the economy expanded at an annual pace of 3.0% last quarter but will shrink 5.2% in the three months ending in June, far weaker than expectations in a poll published last month for 4.0% and 2.0% growth, respectively.
The predicted contraction would be the first – under any gross domestic product calculation, which has changed a few times – since the mid-1990s, when official reporting for quarterly data began.
“The extended lockdown until early May adds further downside risk to our view of a 5% year-on-year GDP fall in the current quarter, the worst in the last few decades,” said Prakash Sakpal, Asia economist at ING.
“We don’t consider economic stimulus as strong enough to position the economy for a speedy recovery once the pandemic ends,” he said.
(Graphic: Reuters poll graphic on coronavirus impact on the Indian economy IMAGE link: here)
The Indian government announced a spending package of 1.7 trillion rupees in March to cushion the economy from the initial lockdown, which has been extended until May 3.
In an emergency meeting last week, the Reserve Bank of India cut its deposit rate again, after reducing it on March 27 and lowering the main policy rate by 75 basis points. It also announced another round of targeted long-term repo operations to ease liquidity.
But even with those measures, 40% of economists, or 13 of 32 – who provided quarterly figures – predicted an outright recession this year. Only one had expected a recession last month.
In the worst case, a smaller sample of respondents predicted, the economy would contract 9.3% in the current quarter. That compares with 0.5% growth in the previous poll’s worst-case forecast in late March, underscoring how rapidly the outlook has deteriorated.
The latest poll’s consensus view still shows the economy recovering again slowly in the July-September quarter, growing 0.8%, then 4.2% in October-December and 6.0% in the final quarter of the fiscal year, in early 2021.
But that compares with considerably more optimistic near-term forecasts of 3.3%, 5.0% and 5.6%, respectively, in the previous poll.
“A rebound in economic activity following the disruption is expected, but the low starting point of growth implies a gradual recovery,” said Upasana Chachra, chief India economist at Morgan Stanley.
“Indeed, before disruptions related to COVID-19, growth was slowing, with domestic issues of risk aversion in financial sector … (and) those concerns will likely stay after the COVID-19 disruptions have passed unless the policy response is much larger than expected,” she said.
The unemployment rate has tripled to 23.8% since the lockdown started on March 25, according to the Centre for Monitoring Indian Economy, a Mumbai-based research firm.
The Indian economy was now forecast to expand 1.5% in the fiscal year ending on March 31, 2021 – the weakest since 1991 and significantly lower than 3.6% predicted in late March. It probably grew 4.6% in the fiscal year that just ended.
Under a worst-case scenario, the median showed the economy shrinking 1.0% this fiscal year. That would be the first officially reported economic contraction for a 12-month period since GDP was reported to have contracted for calendar year 1979.
“Unless fiscal policy is also loosened aggressively alongside monetary policy, there is a big risk the drastic economic slowdown currently underway morphs into an annual contraction in output and that the recovery is hampered,” said Shilan Shah, senior India economist at Capital Economics.
All 37 economists who answered a separate question unanimously said the RBI would follow up with more easing, including lowering the repo and reverse repo rates and expanding the new long-term loans programme.
The RBI was expected to cut its repo rate by another 40 basis points to 4.00% by the end of this quarter. Already lowered twice over the past month by a cumulative 115 basis points, the reverse repo rate was forecast to be trimmed by another 25 points by end-June to 3.50%.
Faced with a backlash from the West over its handling of the early stages of the pandemic, Beijing has been quietly gaining ground in Asia
Teams of experts and donations of medical supplies have been largely welcomed by China’s neighbours
Despite facing some criticism from the West, China’s Asian neighbours have welcomed its medical expertise and vital supplies. Photo: Xinhua
While China’s campaign to mend its international image in the wake of its handling of the coronavirus health crisis has been met with scepticism and even a backlash from the US and its Western allies, Beijing has been quietly gaining ground in Asia.
Teams of experts have been sent to Cambodia, the Philippines, Myanmar, Pakistan and soon to Malaysia, to share their knowledge from the pandemic’s ground zero in central China.
China has also held a series of online “special meetings” with its Asian neighbours, most recently on Tuesday when Premier Li Keqiang discussed his country’s experiences in combating the disease and rebooting a stalled economy with the leaders of the Association of Southeast Asian Nations (Asean), Japan and South Korea.
Chinese Prime Minister Li Keqiang speaks to Asean Plus Three leaders during a virtual summit on Tuesday. Photo: AP
Many Western politicians have publicly questioned Beijing’s role and its subsequent handling of the crisis but Asian leaders – including Philippine President Rodrigo Duterte and Japanese Prime Minister Shinzo Abe – have been reluctant to blame the Chinese government, while also facing criticism at home for not closing their borders with China soon enough to prevent the spread of the virus.
An official from one Asian country said attention had shifted from the early stages of the outbreak – when disgruntled voices among the public were at their loudest – as people watched the virus continue its deadly spread through their homes and across the world.
“Now everybody just wants to get past the quarantine,” he said. “China has been very helpful to us. It’s also closer to us so it’s easier to get shipments from them. The [medical] supplies keep coming, which is what we need right now.”
The official said also that while the teams of experts sent by Beijing were mainly there to observe and offer advice, the gesture was still appreciated.
Another Asian official said the tardy response by Western governments in handling the outbreak had given China an advantage, despite its initial lack of transparency over the outbreak.
“The West is not doing a better job on this,” he said, adding that his government had taken cues from Beijing on the use of propaganda in shaping public opinion and boosting patriotic sentiment in a time of crisis.
“Because it happened in China first, it has given us time to observe what works in China and adopt [these measures] for our country,” the official said.
Experts in the region said that Beijing’s intensifying campaign of “mask diplomacy” to reverse the damage to its reputation had met with less resistance in Asia.
Why China’s ‘mask diplomacy’ is raising concern in the West
29 Mar 2020
“Over the past two months or so, China, after getting the Covid-19 outbreak under control, has been using a very concerted effort to reshape the narrative, to pre-empt the narrative that China is liable for this global pandemic, that China has to compensate other countries,” said Richard Heydarian, a Manila-based academic and former policy adviser to the Philippine government.
“It doesn’t help that the US is in lockdown with its domestic crisis and that we have someone like President Trump who is more interested in playing the blame game rather than acting like a global leader,” he said.
Shahriman Lockman, a senior analyst with the foreign policy and security studies programme at Malaysia’s Institute of Strategic and International Studies, said that as the US had withdrawn into its own affairs as it struggled to contain the pandemic, China had found Southeast Asia a fertile ground for cultivating an image of itself as a provider.
China’s first-quarter GDP shrinks for the first time since 1976 as coronavirus cripples economy
Beijing’s highly publicised delegations tasking medical equipment and supplies had burnished that reputation, he said, adding that the Chinese government had also “quite successfully shaped general Southeast Asian perceptions of its handling of the pandemic, despite growing evidence that it could have acted more swiftly at the early stages of the outbreak in Wuhan”.
“Its capacity and will to build hospitals from scratch and put hundreds of millions of people on lockdown are being compared to the more indecisive and chaotic responses seen in the West, especially in Britain and the United States,” he said.
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Lockman said Southeast Asian countries had also been careful to avoid getting caught in the middle of the deteriorating relationship between Beijing and Washington as the two powers pointed fingers at each other over the origins of the new coronavirus.
“The squabble between China and the United States about the pandemic is precisely what Asean governments would go to great lengths to avoid because it is seen as an expression of Sino-US rivalry,” he said.
“Furthermore, the immense Chinese market is seen as providing an irreplaceable route towards Southeast Asia’s post-pandemic economic recovery.”
Aaron Connelly, a research fellow in Southeast Asian political change and foreign policy with the International Institute for Strategic Studies in Singapore, said Asian countries’ dependence on China had made them slow to blame China for the pandemic.
“Anecdotally, it seems to me that most Southeast Asian political and business elites have given Beijing a pass on the initial cover-up of Covid-19, and high marks for the domestic lockdown that followed,” he said.
“This may be motivated reasoning, because these elites are so dependent on Chinese trade and investment, and see little benefit in criticising China.”
China and Vietnam ‘likely to clash again’ as they build maritime militias
12 Apr 2020
The cooperation with its neighbours as they grapple with the coronavirus had not slowed China’s military and research activities in the disputed areas of the South China Sea – a point of contention that would continue to cloud relations in the region, experts said.
Earlier this month an encounter in the South China Sea with a Chinese coastguard vessel led to the sinking of a fishing boat from Vietnam, which this year assumed chairmanship of Asean.
And in a move that could spark fresh regional concerns, shipping data on Thursday showed a controversial Chinese government survey ship, the Haiyang Dizhi 8, had moved closer to Malaysia’s exclusive economic zone.
The survey ship was embroiled in a months-long stand-off last year with Vietnamese vessels within Hanoi’s exclusive economic zone and was spotted again on Tuesday 158km (98 miles) off the Vietnamese coast.
Young people starting out in the jobs market face a hit to their prospects that could endure years after the Covid-19-induced downturn has run its course
A generation of angry youth raises the spectre of political instability
Freelance filmmaker Anita Reza Zein had grown used to jam-packed production schedules requiring her to put in long hours and run on little sleep. Until Covid-19 struck.
Today, the talented Indonesian is suddenly free. With five projects on hold and many more potentially cancelled, she now spends her time working on a personal project, doing research for her work and occasionally going for a ride on a bicycle.
“I feel calm and patient although I’m jobless. Maybe because it’s still the third week [of social distancing] and I still have enough savings from my previous work,” said the 26-year-old, who is from Yogyakarta. “But I imagine life will become tougher in the next few months if the situation gets worse.”
Like her, millions of youths are now part of a job market in Southeast Asia that has been ravaged by the coronavirus pandemic. They are the unlucky cohort of 2020 whose fortunes have changed so drastically, so quickly.
Freelance filmmaker Anita Reza Zein now spends most of her time at home as her projects have all been frozen due to the spread of Covid-19. Photo: Anita Reza Zein
Just three months ago, many eager graduates were about to partake in a strong economy and possibly land decent pay cheques.
Today, job offers are being withdrawn and hiring halted, leading to a spike in regional youth unemployment in the short term. In the long term, the effects on the Covid-19 cohort could lead to wider social and political problems.
JOB MARKETS SHUT
The virus’ impact on economies and the job market in the region has been swift and devastating. Borders have been slammed shut, workers ordered to stay at home, and thousands of companies closed every week.
The biggest problem is the lack of certainty about how long this will last – the longer the governments keep their countries on lockdown, the worse the economic impact.
In Indonesia, for example, the virus has caused almost 2.8 million people to lose their jobs, according to the Manpower Ministry and the Workers Social Security Agency. Likewise, in Malaysia, an estimated 2.4 million people are expected to lose their jobs, going by data from the Malaysian Institute of Economic Research (MIER).
is bracing itself for a 5.3 per cent contraction in GDP for the full year, the worst since the Asian financial crisis in 1997.
“We think about seven million jobs have been lost already, and the figure will hit 10 million if the outbreak drags on for two to three more months,” said Kalin Sarasin, council member and head of the Thai Chamber of Commerce.
Lockdown for 34 million people in capital Jakarta as Indonesia fights surge in coronavirus deaths
For young jobseekers, the outbreak of the Covid-19 pandemic could hurt even more, with companies unwilling to open up new jobs for them.
“My clients who were open to fresh graduates previously have realigned searches [for candidates] who have at least one year of experience, as it’s a lot faster for someone with experience to scale up quickly and contribute,” said Joanne Pek, a recruiter at Cornerstone Global Partners’ Singapore office.
For many small and medium-sized enterprises (SMEs) such as Singapore-based restaurant chain The Soup Spoon, saving jobs – rather than recruiting – is the priority.
“We don’t want to let anyone go during this period, so we’re focused on protecting jobs,” said co-founder and director Benedict Leow, who employs some 250 workers.
THE COVID-19 COHORT
The looming economic downturn could have distinct consequences for the Class of 2020 that will outlast the economic downturn itself.
For one thing, the paucity of jobs could result in the Covid-19 cohort becoming a “lost generation” of sorts, said Achim Schmillen, a senior economist at the World Bank Social Protection and Jobs Global Practice.
“Research from around the globe shows that graduating in a recession can have significant and long-lasting impacts that can affect the entire career. In particular, it can lead to large initial earnings losses which only slowly recede over time,” he said.
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Economics professor Jeff Borland of the University of Melbourne said that international studies showed that what happened to people when they first entered the labour market would affect them for the rest of their working lives.
“Many international studies have shown that trying to move into employment during a major economic downturn cuts the probability of employment and future earnings for a decade or more.
“Why this occurs is less well-established. Reasons suggested include being forced to take lower-quality jobs, losing skills and losing psychological well-being,” he said in a piece published on The Conversation website.
Malaysia sets up Covid-19 test zones in the capital to hunt for ‘hidden’ coronavirus cases
This could create “lasting scarring” on the graduates this year, said labour economist Walter Theseira.
“If their careers start badly, it would affect their earnings for a number of years because they would lack the same experience as peers who started in a more secure position,” the associate professor of economics at Singapore University of Social Sciences said.
Shrinking salaries and the downsizing of companies mean that graduates might have to seek out professions outside their areas of study to survive, said Grace Lee Hooi Yean, head of the Economics Department at Monash University, Malaysia.
She said youth unemployment in the country, which stands at 11.67 per cent, could rise sharply.
“This looming crisis could trap a generation of educated and capable youth in a limbo of unmet expectations and lasting vulnerability if the graduates are not ready to face reality and adapt to the new challenges,” she said.
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This is fast becoming the reality for final-year medical student Rebecca K. Somasundaram, who has been left without a job due to the pandemic.
After being offered a residency programme at a top specialist hospital in Kuala Lumpur, she was notified a month ago that her placement had been made void until further notice. This has thrown the 24-year-old’s plans into disarray as she was hoping to enter the workforce soon to pay off her student debts. Her plans to get married next year have also been put on hold temporarily.
“I am in constant talks with the hospital to see if there is any way I can join them soon but seeing how things are unfolding so quickly, I am slowly losing hope,” she said.
Over in Indonesia, the pandemic will trigger job losses on a national scale. To combat this, the government would need to introduce strong fiscal measures and beef up its social protection policies, said the country’s former minister of finance Muhamad Chatib Basri.
Many people on lower incomes tend to work in the extraction industry, such as mining and palm oil, and these are the first industries hit due to the global slowdown.
“The rich will be able to brave the storm, but the poor have no means to do so,” he said.
Singapore migrant workers under quarantine as coronavirus hits dormitories
SPECTRE OF 1997
With partial lockdowns imposed in the capital of Jakarta, more needs to be done to ensure that vulnerable citizens have access to food and financial support.
Without government intervention, economic woes could soon translate into political instability, a scenario last seen in the Asian financial crisis.
In 1997, waves of discontent sparked racial riots in Indonesia that toppled the country’s long-time strongman Suharto, while in Thailand a political crisis created the conditions for populist leader Thaksin Shinawatra to rise.
Rising discontent could have serious implications at the ballot boxes, warned Basri, who said young voters were a key voting bloc for President Joko “Jokowi” Widodo.
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In last year’s general elections, Jokowi proved a hit among the lower-educated youth who had benefited from the creation of largely unskilled jobs during his tenure.
“With more young people expected to become unemployed in the coming months, things will only get worse from here,” said Basri, who added that the country’s youth unemployment stood at almost 20 per cent in 2018.
Indonesia, which has 268 million people and is Southeast Asia’s largest economy, had 133 million workers as of last August, according to official data.
Close to 10 per cent or about 12.27 million are university graduates but among this group, about 5.67 per cent or some 730,000 were unemployed. This was higher than the country’s overall unemployment rate at that time, which was 5.28 per cent.
‘Ghosts’ deployed to scare Indonesians into staying home to slow spread of the coronavirus
GETTING IT RIGHT
Economists say, however, that all is not lost. Much will depend on policy and how governments focus on battling the virus on the public health and economic fronts. They point to Singapore, which has launched a robust response to the crisis.
On April 6, the Singapore government announced its third budget in two months to help companies and households tide over the crisis. In all, Singapore’s total stimulus package, which aims to save jobs and keep funds flowing to companies, will cost the government a massive S$59.9 billion (US$42 billion).
The Singapore government was also preparing for a labour market that would be reluctant to hire fresh graduates on a full-time basis, said Theseira.
“There are plans to implement large-scale subsidised traineeships, which may be more palatable to companies which are worried about taking on permanent headcount this year,” he noted. “As the economic situation improves, they can be converted to permanent positions.”
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While jobs were being created for fresh graduates, many would still have to temper their expectations, such as taking jobs with lower starting pay, said DBS Bank economist Irvin Seah.
“There are still some jobs to go around. There are still some companies that may need workers. But they will need to be realistic,” he said.
For instance, despite the downturn, Singapore telco Singtel expects to recruit over 300 fresh graduates for various permanent positions this year, according to Aileen Tan, the company’s Group Chief Human Resources Officer. Many of the new hires will be in new growth areas such as the Internet of Things, analytics and cloud.
The Singtel Comcentre building in Singapore. Photo: Roy Issa
Other companies that continue to hire include those in tech across the region, including e-commerce giant Shopee, food-delivery service Foodpanda and Amazon.
In Australia, Borland suggested helping young people to remain plugged into the labour market through government-funded paid internships, or even offering them loans to go for further studies and prevent a spell of unemployment.
For now, while some young jobseekers are taking a wait-and-see approach, the reality is hitting hard for others.
Final-year National University of Singapore student H.P. Tan had all but secured a job at a public relations firm last month, after three rounds of interviews.
The Faculty of Arts and Social Sciences undergraduate was rejected via an email from the agency, which said that they could no longer hire after Covid-19 started to drastically cut business.
“When I got that rejection, it was a turning point. I didn’t think I would be directly impacted,” said the 23-year-old.
“I also applied to a few other agencies but the response has been slow, so I am now freaking out at the possibility of not being able to find a job after graduation.”
China’s economy shrank for the first time in decades in the first quarter of the year, as the virus forced factories and businesses to close.
The world’s second biggest economy contracted 6.8% according to official data released on Friday.
The financial toll the coronavirus is having on the Chinese economy will be a huge concern to other countries.
China is an economic powerhouse as a major consumer and producer of goods and services.
This is the first time China has seen its economy shrink in the first three months of the year since it started recording quarterly figures in 1992.
“The GDP contraction in January-March will translate into permanent income losses, reflected in bankruptcies across small companies and job losses,” said Yue Su at the Economist Intelligence Unit.
Last year, China saw healthy economic growth of 6.4% in the first quarter, a period when it was locked in a trade war with the US.
In the last two decades, China has seen average economic growth of around 9% a year, although experts have regularly questioned the accuracy of its economic data.
Its economy had ground to a halt during the first three months of the year as it introduced large-scale shutdowns and quarantines to prevent the virus spread in late January.
As a result, economists had expected bleak figures, but the official data comes in slightly worse than expected.
Among other key figures released in Friday’s report:
Factory output was down 1.1% for March as China slowly starts manufacturing again.
Retail sales plummeted 15.8% last month as many of shoppers stayed at home.
Unemployment hit 5.9% in March, slightly better than February’s all-time high of 6.2%.
Analysis: A 6% expansion wiped out
Robin Brant, BBC News, Shanghai
The huge decline shows the profound impact that the virus outbreak, and the government’s draconian reaction to it, had on the world’s second largest economy. It wipes out the 6% expansion in China’s economy recorded in the last set of figures at the end of last year.
Beijing has signalled a significant economic stimulus is on the way as it tries to stabilise its economy and recover. Earlier this week the official mouthpiece of the ruling Communist Party, the People’s Daily, reported it would “expand domestic demand”.
But the slowdown in the rest of the global economy presents a significant problem as exports still play a major role in China’s economy. If it comes this will not be a quick recovery.
On Thursday the International Monetary Fund forecast China’s economy would avoid a recession but grow by just 1.2% this year. Job figures released recently showed the official government unemployment figure had risen sharply, with the number working in companies linked to export trade falling the most.
China has unveiled a range of financial support measures to cushion the impact of the slowdown, but not on the same scale as other major economies.
“We don’t expect large stimulus, given that that remains unpopular in Beijing. Instead, we think policymakers will accept low growth this year, given the prospects for a better 2021,” said Louis Kuijs, an analyst with Oxford Economics.
Since March, China has slowly started letting factories resume production and letting businesses reopen, but this is a gradual process to return to pre-lockdown levels.
Media caption Why does China’s economy matter to you?
China relies heavily on its factories and manufacturing plants for economic growth, and has been dubbed “the world’s factory”.
Stock markets in the region showed mixed reaction to the Chinese economic data, with China’s benchmark Shanghai Composite index up 0.9%.
SUIFENHE, China (Reuters) – China’s northeastern border with Russia has become a frontline in the fight against a resurgence of the coronavirus epidemic as new daily cases rose to the highest in nearly six weeks – with more than 90% involving people coming from abroad.
Having largely stamped out domestic transmission of the disease, China has been slowly easing curbs on movement as it tries to get its economy back on track, but there are fears that a rise in imported cases could spark a second wave of COVID-19.
A total of 108 new coronavirus cases were reported in mainland China on Sunday, up from 99 a day earlier, marking the highest daily tally since March 5.
Imported cases accounted for a record 98. Half involved Chinese nationals returning from Russia’s Far Eastern Federal District, home to the city of Vladivostok, who re-entered China through border crossings in Heilongjiang province.
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“Our little town here, we thought it was the safest place,” said a resident of the border city of Suifenhe, who only gave his surname as Zhu.
“Some Chinese citizens – they want to come back, but it’s not very sensible, what are you doing coming here for?”
The border is closed, except to Chinese nationals, and the land route through the city had become one of few options available for people trying to return home after Russia stopped flights to China except for those evacuating people.
Streets in Suifenhe were virtually empty on Sunday evening due to restrictions of movement and gatherings announced last week, when authorities took preventative measures similar to those imposed in Wuhan, the central Chinese city where the pandemic ripping round the world first emerged late last year.
The total number of confirmed cases in mainland China now stands at 82,160 as of Sunday, and at the peak of the first wave of the epidemic on Feb 12 there were over 15,000 new cases.
Though the number of daily infections across China has dropped sharply from that peak, China has seen the daily toll creep higher after hitting a trough on March 12 because of the rise in imported cases.
Chinese cities near the Russian frontier are tightening border controls and imposing stricter quarantines in response.
Suifenhe and Harbin, the capital of Heilongjiang, are now mandating 28 days of quarantine as well as nucleic acid and antibody tests for all arrivals from abroad.
In Shanghai, authorities found that 60 people who arrived on Aeroflot flight SU208 from Moscow on April 10 have the coronavirus, Zheng Jin, a spokeswoman for the Shanghai Municipal Health Commission, told a press conference on Monday.
Residents in Suifenhe said a lot of people had left the city fearing contagion, but others put their trust in authorities’ containment measures.
“I don’t need to worry,” Zhao Wei, another Suifenhe resident, told Reuters. “If there’s a local transmission, I would, but there’s not a single one. They’re all from the border, but they’ve all been sent to quarantine.”
BEIJING (Reuters) – China’s factory gate prices fell the most in five months in March, with deflation deepening and set to worsen in coming months as the economic damage wrought by the coronavirus outbreak at home and worldwide shuts down many countries.
The world’s second-largest economy is trying to restart its engines after weeks of near paralysis to contain the pandemic that had severely restricted business activity, flow of goods and the daily life of people.
Friday’s data from the National Bureau of Statistics suggested a durable recovery was some way off, with China’s producer price index (PPI) falling 1.5% from a year earlier, the biggest decline since October last year. It compared with a median forecast of a 1.1% fall tipped by a Reuters poll of analysts and a 0.4% drop in February.
Headline consumer inflation also eased somewhat last month, partly led by government control measures, while core prices remained benign, leaving more room for monetary easing, some analysts said.
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The overall decline in the factory gate gauge was exacerbated by a slump in global oil and commodities prices, which filtered through to crude oil, steel and non-ferrous metal industries, the statistics bureau said in a statement accompanying the data.
“The issue of having more supply than demand, and persistently low oil prices, will intensify deflationary pressures,” said Yang Yewei, a Beijing-based analyst with Southwest Securities.
“Work resumptions on the production side are faster than the repair in demand. Downstream demand is recovering slowly and still remains weak,” he said.
The oil and gas extraction sector had the biggest year-on-year price fall of 21.7%, among the 40 major industrial sectors surveyed, deteriorating sharply from a 0.4% drop in the previous month.
The stringent travel and transport curbs have now been lifted across much of the country including Wuhan, the epicentre of the outbreak where the virus first emerged in late 2019. So far the virus has killed more than 3,300 and infected over 81,000 people in the country.
Analysts expect a deep first-quarter economic contraction in China and have grown increasingly pessimistic about the country’s prospects for 2020 due to the pandemic’s sweeping global impact.
Many economists and policymakers are forecasting a steep global recession this year as numerous countries are forced into lockdowns to contain the spread of the coronavirus, severely curtailing business activity in a major blow to jobs and incomes.
Worldwide, the virus has killed around 95,000 people and infected more than 1.5 million. Policymakers globally have responded to the crisis by launching an unprecedented package of stimulus measures, injecting trillions of dollars to backstop their economies that have been brought to a virtual standstill.
Beijing has also rolled out a series of fiscal and monetary support steps, and sources have told Reuters that policymakers are readying more stimulus in the coming months to stabilise growth and prevent mass unemployment.
China’s consumer prices rose 4.3% from a year earlier in March, compared with a 4.8% gain tipped by a Reuters poll and a 5.2% increase in February, as logistics and transport conditions improved and government price control measures kicked in.
But food prices still rose over 18% from a year earlier, led by a 116.4% jump in pork prices, the data showed. The virus outbreak has pushed up prices of some food items, such as pork and vegetables.
Core inflation – which excludes food and energy prices – remained benign last month at 1.2%，but it still edged up from 1% in February.
Image copyright GETTY IMAGESImage caption More than a billion people have been staying at home during the lockdown
Will India extend its rigorous 21-day lockdown to slow the spread of coronavirus beyond its end date next week? By all accounts, yes.
On 24 March, India shut its $2.9 trillion economy, closing its businesses and issuing strict stay-at-home orders to more than a billion people. Air, road and rail transport systems were suspended.
Now, more than two months after the first case of Covid-19 was detected in the country, more than 5,000 people have tested positive and some 150 people have died. As testing has ramped up, the true picture is emerging. The virus is beginning to spread through dense communities and new clusters of infection are being reported every day. Lifting the lockdown could easily risk triggering a fresh wave of infections.
A harsh lockdown is certain to slow down the disease. Virologists I spoke to believe India is still at an early stage of the infection. The country still doesn’t have enough data on the transmissibility of the virus or even how many people could have been infected and recovered to develop adequate herd immunity. (It is slowly beginning finger prick blood tests to look at the presence of protective antibodies.)
More than 250 of India’s 700-odd districts have reported the infection. Reports say at least seven states have a third of all infections, and want the lockdown extended. Six states have reported clusters of rapidly growing infections – from the capital Delhi in the north to Maharashtra in the west and Tamil Nadu in the south.
Economic fallout
Not surprisingly, the lockdown is already hurting the economy. Many of the early hotspots are economic growth engines and contribute heavily in revenues to the exchequer. Mumbai, India’s financial capital and Maharashtra’s main city, accounts for more than a third of overall tax collection. The densely populated city has reported more than 500 cases and 45 deaths, and numbers are steadily rising. Authorities say the infection is now spreading through the community. Mumbai has made wearing face masks mandatory.
Image copyright GETTY IMAGESImage caption India has ramped up testing during the lockdown
Many of these hotspot clusters are also thriving manufacturing bases. The spread of infection means that they will be under lockdown for a longer period of time.
The services industry, which generates almost half of India’s GDP, is also likely to remain shut for some more time. Construction, which employs a bulk of migrant workers, will remain similarly suspended. The unemployment rate may have already climbed to more than 20% after the lockdown, according to a report by the Center for Monitoring Indian Economy.
For the moment, economists say, the government will have to prioritise farming over everything else to ensure the livelihoods of millions and secure the country’s future food supplies.
Half of India’s labour force work on farms. The lockdown happened at a time when a bumper winter crop had to be harvested and sold, and the rain-fed summer crop had to be sowed. The immediate challenge is to harvest and market the first crop, and secure the second.
Moving trucks to pick up produce and take them to markets, with adequate social distancing and hand washing will be something the government will have to move on quickly.
“The immediate challenge is to ensure that rural India is not hit,” says Rathin Ray, an economist. “Realistically, a complete lockdown cannot be continuously maintained beyond early May. We don’t have a choice but to reopen gradually after that.”
Image copyright GETTY IMAGESImage caption India has been under a lockdown from 24 March
There is little doubt about that. For his part, SK Sarin, who heads a government advisory panel on combating the disease, says the lockdown can be only eased in a “graded manner in areas that are not hotspots” and that the hotspots remained cordoned off.
Like other affected countries, India will have to prepare itself for what Gabriel Leung, an infectious disease epidemiologist and dean of medicine at the University of Hong Kong, describes as several rounds of “suppress and lift” cycles.
During these periods “restrictions are applied and relaxed, applied again and relaxed again, in ways that can keep the pandemic under control but at an acceptable economic and social cost.”
Also, Dr Leung observes, “how best to do that will vary by country, depending on its means, tolerance for disruption and its people’s collective will. In all cases, however, the challenge essentially is a three-way tug of war between combating the disease, protecting the economy and keeping society at an even keel”.
It is now clear that shutdowns need to continue until transmission has slowed down markedly, and testing and health infrastructure has been scaled up to manage the outbreak.
Experts from the southern state of Kerala, a striking outlier that is containing the infection thanks to a transparent government and a robust public health system, say it isn’t time to lift the lockdown yet and have recommended a three-phase relaxation.
For most countries, easing the lockdown is a tricky policy choice. It sparks fears of triggering a fresh wave of infection and presents the inevitable trade-off between lives and livelihoods. French Prime Minister Edouard Phillipe, says relaxing the lockdown in his country is going to be “fearsomely complex”. In a crisis like this, according to his Dutch counterpart Mark Rutte, leaders have to “make 100% of the decisions with 50% of the knowledge, and bear the consequences.”
Image copyright GETTY IMAGESImage caption India’s financial capital, Mumbai, is emerging as a hotspot
It is going to be tougher for India with its vast size, densely packed population and enfeebled public health system. Also, no country in the world possibly has so much inter-state migration of casual workers, who are the backbone of the services and construction industries.
How will India manage to return these workers to their work places – factories, farms, building sites, shops – without a substantial easing of public transport at a time when crowded trains and buses can be a vector of transmission and easily neutralise the gains of the lockdown? Even allowing restricted mobility – allowing social distancing, temperature checks and passenger hygiene – would put considerable pressure on the public transport system.
The policy choices are fiendishly tough, and the answers are far from easy. India bungled the lockdown by not anticipating the exodus of millions of migrant workers from cities. The weeks ahead will tell whether the fleeing men, women and children carried the infection to their villages. The country simply cannot afford to make similar mistakes again while trying to relax the lockdown. Nitin Pai of The Takshashila Institution, a think tank, believes states should be left to decide on easing restrictions, and decisions “should be based on threat [of infection], which should be determined by extensive testing”.
This week Prime Minister Narendra Modi said that the “situation in the country is akin to a social emergency”. His government now needs make sure that the looming threat to the nation’s health and economic progress is tackled skilfully.
TOKYO (Reuters) – Uncertainty over Japan’s economic outlook is “extremely high” as the coronavirus pandemic hits output and consumption, central bank Governor Haruhiko Kuroda said, stressing his readiness to take additional monetary steps to prevent a deep recession.
While aggressive central bank actions across the globe have eased financial market tensions somewhat, corporate funding strains were worsening, Kuroda told a quarterly meeting of the Bank of Japan’s regional branch managers on Thursday.
“The spread of the coronavirus is having a severe impact on Japan’s economy through declines in exports, output, demand from overseas tourists and private consumption,” he said.
Japan recorded 503 new coronavirus infections on Wednesday – its biggest daily increase since the start of the pandemic – as a state of emergency took effect giving governors stronger legal authority to urge people to stay home and businesses to close.
In contrast to stringent lockdowns in some countries, mandating fines and arrests for non-compliance, enforcement will rely more on peer pressure and a deep-rooted Japanese tradition of respect for authority.
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The balancing act underscores the difficulty authorities have in trying to contain the outbreak without imposing a mandatory lockdown that could deal a major blow to an economy already struggling to cope with the virus outbreak.
Hideaki Omura, the governor of the central Japan prefecture of Aichi, said he would declare a state of emergency for his prefecture on Friday.
Omura said Aichi, which includes the city of Nagoya and hosts Toyota Motor Corp, was talking with the central government about being included in the national state of emergency as well, but felt he could not wait any longer to restrict movement.
“Looking at things the past week and watching the situation – the rise in patients, the number without any traceable cause – we judged that it was a very dangerous situation and wanted to make preparations,” he told a news conference.
Even with less stringent restrictions compared with other countries, analysts polled by Reuters expect Japan to slip into a deep recession this year as the virus outbreak wreaks havoc on business and daily life.
Shares of Oriental Land Co (4661.T) fell on Thursday after the operator of Tokyo Disneyland said it would keep the amusement park shut until mid-May.
Entertainment facility operator Uchiyama Holdings (6059.T) said it was closing 43 karaoke shops and 11 restaurants until May 6.
“For the time being, we won’t hesitate to take additional monetary easing steps if needed, with a close eye on developments regarding the coronavirus outbreak,” Kuroda said.
Kuroda’s remarks highlight the strong concern policymakers have over the outlook for Japan’s economy and how companies continue to struggle to generate cash, despite government and central bank promises to flood the economy with funds.
At its policy meeting later this month, the BOJ is likely to make a rare projection that the world’s third-largest economy will shrink this year, sources have told Reuters.
The BOJ eased monetary policy in March by pledging to boost purchases of assets ranging from government bonds, commercial paper, corporate bonds and trust funds investing in stocks.
The government also rolled out a nearly $1 trillion stimulus package to soften the economic blow.
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