Containers and trucks at the port of Qingdao, China, on February 14, 2019.
Reuters
BEIJING – China has not fully recovered from the shock of the coronavirus pandemic, business leaders said in a China Beige Book survey released on Tuesday.
After about a year since Covid-19 first appeared in the Chinese city of Wuhan, about two-thirds of executives interviewed by the outsourced company said they did not expect sales, profitability and hiring to return to 2019 levels until at least three months from now.
The China Beige Book conducted more than 3,300 interviews between November 12 and December 11 in its latest quarterly survey of business activities.
Credit concerns and commercial tensions
For the fourth quarter, China Beige Book found sharp declines in the growth in sales of luxury goods, food and clothing compared to the previous quarter.
“Companies in these subsectors have seen narrower margins, as well as weaker sales volumes and growth in hiring,” said the report.
This was in contrast to the better performance of car dealerships and furniture and appliance suppliers, indicating that wealthier families may be driving general consumption by spending on expensive items, noted the Beige Book.
Creditors were also more concerned with the retail business. While the rate of rejection of loans has remained fairly stable across most sectors – around 10% to 20% – that of the retail sector rose to 38% in the fourth quarter, the report said.
Domestic demand is a key part of Beijing’s plan for sustainable economic growth in the coming years. China has tried to depend more on its own consumers for growth than on exports, especially amid rising tensions with major trading partners, such as the United States
China is still a bright spot, but prospects are tentative
In the service sector, China Beige Book also found that fourth quarter earnings were not driven by consumers, but by sectors that address business needs, such as telecommunications, shipping and financial services.
The chain’s restaurants have not seen much growth, while travel has not grown and hospitality has registered the weakest revenue, the report said.
The Beige Book also pointed out that, compared to an increase in exports, China’s imports have stagnated since an initial recovery from the first quarter shock.
The Chinese market remains a bright spot for companies worldwide after the country was able to control the outbreak internally and return to general growth in the second quarter.
But 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 mean that the pandemic is an uncertainty for Chinese officials and companies.
China’s annual economic data for 2020 will be released on January 18, according to the National Bureau of Statistics website.