Some cities have resorted to handing out
shopping vouchers and trying to reassure
consumers by showing officials on state media
eating in restaurants. Consumption is a smaller
share of China’s economy than in the United
States and other high-income countries but
accounted for 80% of last year’s growth.
Economists earlier forecast China would bounce
back as early as this month. They cut growth
forecasts and pushed back recovery timelines
after January-February activity was even worse
than expected.
Bernstein Research says auto sales might fall by
as much as 15%, deepening a 2-year-old slump
in the global industry’s biggest market.
With factories closed and some 800 million people
told to stay home, consumer spending shrank
23.7% from a year earlier and manufacturing
fell 13.5%. Auto sales plunged 82% in February.
Projections of full-year Chinese growth, previously
close to 6%, are now as low as zero.
That is dragging down global growth forecasts.
The International Monetary Fund says the
world economy might contract by up to 3%, a
far bigger hit than 2009’s 0.1% loss during the
global financial crisis.
Other Asian economies, which are more
exposed to global trade, are unlikely to see quick
recoveries and will likely follow the West into a
downturn, according to Morgan Stanley.
In China, manufacturing is back to 80% of usual
levels, but urban traffic, power use and other
indicators of daily life are at half to 65% of normal.
At the same time, public anxiety has been fed
by reports of new outbreaks that have led to
more controls.