The obvious dynamism of the Chinese society combined with its general optimism have helped the Chinese economy get off to a good start. The real estate sector is recovering quickly, see the article here.
April: exports helped by the masks and the postponement of delivery
As for exports, we have to be careful. Chinese customs recorded, for the month of April, a sales growth of 3.5% at an annual rate while economists were expecting a 15% drop after a 6.6% drop in March. These figures in fact hide a different reality. A large number of orders could not be fulfilled earlier due to the closure and halt of production, they could only leave China in April when they should have been delivered in March or February. In addition, the medical sector pulled exports out of the market. For example, the textile sector, which includes the production of masks, is up 5.9%. The precise details of the component of these exports are not given, but it is clear that we should not get carried away. All the products that do not have any relation with the medical sector are in decline. The toy industry shows a decrease of 13.5%, clothing 20.7%, automotive in volume 7.2%, footwear 24.4%, bags and luggage 23.4%, steel 11.7%, plastic products 0.4%.
200 million jobs at risk
The export sector directly or indirectly generates nearly 200 million jobs. Official harmonious figures traditionally give a fairly low unemployment rate, below 6% for the last 4 months. These statistics include only a part of the active population of 800 million people because they ignore the mass of migrant workers. The difficulties of companies show that the crisis has certainly done much more harm. The South China Morning Post quotes Liu Chenjie, an economist, who believes that 205 million workers cannot return to their jobs.
The difficult adjustement of exporting companies
A report in China Newsweekly,中国新闻周刊，in exporting zones, such as Dongguan or Ningbo, show the difficulties of the last 4 months. After negotiating with their foreign customers in January and February about delivery delays, Chinese factories, as the epidemic has been on the rise worldwide, have had to deal with order reductions or even cancellations. They are trying to return to the domestic market, but this is not always the solution. A clothing manufacturer for a major European brand explains that many items do not necessarily correspond to the tastes and expectations of Chinese customers, not to mention the measurements, which can be different. One sector, which employs nearly a quarter of the working population, is therefore at the mercy of the evolution of the pandemic worldwide.
The rebound in exports in April is in fact only “cyclical”, and we will have to look closely at the developments in the various sectors in May.
13 May 2020