China’s economic growth is still being hindered by Covid-19 restrictions and anxieties that are depressing domestic travel and constraining consumption.
Mobility statistics on flights, the movement of containers at major ports, plus city passenger traffic all deteriorated in October despite falling number of coronavirus cases.
Some 28 cities are currently implementing various levels of lockdown measures, according to a note from Nomura on Tuesday, which cited government statistics and its research as of Monday October 24.
“We estimate around 207.7 million individuals are currently affected by these lockdown measures, down from 225.1 million in the previous week, in regions that make up around 25.6 trillion RMB/yuan ($3.5 trillion) of the country’s total GDP,” it said.
China reported a faster-than-expected 3.9% expansion in its economy in the third quarter on Monday, but data for September showed weak imports of goods and retail sales, indicating domestic demand is still subdued.
Even in its feeble state, household consumption of goods and services accounted for more than half of gross domestic product growth in the third quarter, underlining its outsized weighting in the economy.
Curbs Deter Travel
Mike, an international school teacher in Xian, said he had decided to stay put in the city.
“It is simply not worth the financial risk as well the mental strain of having to deal with getting locked down in another city, endless cancellations of flights, etc,” he said, requesting he only be identified by his first name.
A gauge of how mobile people are in China slumped 29.5% on October 23 from a year earlier, versus a decline of 27.5% a week earlier, Nomura wrote in another research note, citing GPS data tracked by Chinese search engine giant Baidu.
The ratio of cancelled flights to scheduled flights remained elevated, rising to 68% over the week of October 18-24 from 67% the week before, according to calculations based on data from air traffic consultancy Variflight.
Container throughput at eight major ports fell 7.3% during October 1-10 from a year earlier, compared with a 4.4% increase in the last 10 days of September, partly due to worsening domestic trade, data from China Ports and Harbours Association showed.
And an index measuring road freight transport turnover tumbled 26% on October 21 from a year prior versus a 23.7% drop a week earlier, Nomura said.
As China wages war on Omicron this year, authorities have stepped up PCR tests on local populations and ramped up requirements on visitors, dampening the desire to travel. Inspections of goods from overseas and other provinces have also delayed deliveries for days and even weeks.
China has repeatedly underlined its zero-Covid policies even as cases ebb. New local infections fell 24% to 6,096 during October 18-24 from a week earlier.
Case Numbers Surge in 3 Big Cities
Despite the drop, the cities of Guangzhou, Zhengzhou and Xian have reported a resurgence, risking the implementation of more curbs on their combined population of more than 44 million.
The cities – major domestic logistics hubs and producers of everything from autos and auto parts to machinery and electronics – reported a total of 804 new local cases for October 18-24, up from 431 in the previous seven-day period.
In Zhengzhou, residents of some districts have been told to “stay at home”, while dining-in is prohibited at restaurants. Schools, childcare institutions and off-campus training institutions function online only.
Zhengzhou’s metro traffic slumped 79% from October 11 to 15, according to the latest available data.
And in Guangzhou, colleges have been closed since Monday in one district, while primary and secondary schools and kindergartens have gone online and restaurants have been shut since last week. In another district, cinemas, theatres, bars, gyms and internet cafes were closed until Wednesday.
Metro traffic in Guangzhou dropped 8.8% during October 18-24 from the previous week, according to calculations based on data released by local metro operators.
“With the ‘dynamic clearing’ Covid strategy likely to stay in place for the foreseeable future, consumption is unlikely to rebound,” Chinese research group Gavekal Dragonomics forecast.
- Reuters with additional editing by Jim Pollard
NOTE: This report was updated with further details on October 25.