A security guard at a thermal power plant wears a mask as a new coronavirus epidemic rages in Beijing on February 27,2020. REUTERS/Thomas Peter
BEIJING, Feb.29(Reuters)- The negative impact of the new outbreak of corona pneumonia on China`s economics is emerging, with record-lows beating expectations despite widespread expectations of a sharp fall in official manufacturing PMI in February. Massive shutdowns during the epidemic have slowed industrial production across the board, and a significant weakening of production and demand also bodes ill for key economic indicators in the first quarter; but economic activity will slowly recover as china moves from a full-scale epidemic to a resumption of production.
Economic, which should have stabilised for the better, was temporarily disrupted by the sudden outbreak, and analysts believe that as the epidemic is gradually brought under control and businesses resume production in an orderly manner, the pent-up demand under the epidemic will be released, and as it expands production, investment, consumption and exports will gradually return to growth.
China`s National Bureau of Statistics and Logistics and Procurement Union (CFLP) Saturday Common The macro economic leading indicator -- the official manufacturing purchasing managers`index (pmi) fell sharply in february to 35.7, well below the median reuters estimates of 46 and 50 in january, and hit a record low.
"The sharp decline in indicators reflecting both supply- and demand-side indicators indicates the impact of the epidemic on current production and market demand. Combined with the change in the January-February PMI index, major economic indicators are expected to show a sharp decline in year-on-year growth in January-February. Zhang liqun, a special analyst at logistics and procurement union, said.
He added that the epidemic had changed the pmi`s supposed rise to a sharp decline, reflecting the impact of the epidemic, and expected a significant decline in the first quarter`s main economic indicators, which must be fully estimated and prepared.
Zhang de-li, a macro analyst at guangdong securities, expects that internal and external needs to fall simultaneously, resulting in the accumulation of finished goods inventory, product price reduction and economic re-entry into passive inventory. The official PMI will be significantly repaired in March, as follow-up work and production will accelerate, and PMI is a ring indicator.
China`s February composite PMI output index was 28.9, down 24.1 points from the previous month, indicating an overall slowdown in Chinese production and operation, according to data. From the classification index, the five classification indexes that make up the manufacturing PMI are below the critical point, with the production index and the new order index falling most significantly, down 23.5 points and 22.1 points respectively from the previous month.
Zhao Qinghe, senior statistician at the Bureau of Statistics Services Survey Center, read:`There is a rapid recovery in the rate of enterprise rework and an orderly recovery in production and business operations. As of February 25, large and medium - sized enterprises had a turnover rate of 78.9%, of which 85.6% were large and medium - sized manufacturing enterprises.
China`s National Health and Health Commission announced Saturday that on February 28,427 new confirmed cases of coronary pneumonia and 47 new cases of dead (45 in Hubei,1 in Beijing and 1 in Henan) were reported by 31 provinces (autonomous regions and municipalities directly under the Central Government) and the Xinjiang Production and Construction Corps. Four new cases outside Hubei hit a new low since the National Health and Health Commission began releasing national data on January 20.
The central steering group warned friday that with the resumption of work and the return of staff, the epidemic may "return ", some regions may face a rebound, must not have a fluke mentality, relief. In the process of resuming production and rehabilitation, if there is a situation of the epidemic rebound caused by the lack of prevention and control measures, it will be dealt with seriously; at the same time, it will continue to implement strict control of the routes from Han to Hubei to curb the spread of the epidemic export.
** Significant contraction in demand and production**
As a result of the pneumonia epidemic, the manufacturing supply chain slowed in February, market demand and business production contracted significantly, and employment was tight.
Liu xuezhi, a senior researcher at the bank of communications`s financial research center, points out that work resumed slowly after the spring festival and production resumed until march. Under the premise of controllable epidemic situation, in order to relieve the downward pressure of production and demand, and to ensure the necessary social demand and stable employment, the whole country gradually began to resume work. Because many enterprises especially small and medium-sized enterprises do not have full-time medical staff, lack of anti-epidemic equipment material, resulting in the resumption of work is very slow.
In addition, the labor force after the spring has been blocked, the return passenger flow during this year`s Spring Festival transportation is only 1/6 in previous years, and the return rate of workers in 15 cities as of February 20 is only 25.6%, compared with the general rework rate of more than 80% after the Spring Festival transportation in previous years, resulting in the general problem of re-work enterprises facing employment. As a result, even at the end of february, many companies began to resume work, but capacity is still low. "The resumption of production will not become apparent until after March. "he said.
Wen Tao, of the China Logistics Information Center, said in his reading that the spread of the epidemic led to a contraction in market demand, further slowing supply chain upstream and downstream demand due to delays in the start-up and resumption of work. Due to the supply chain companies delayed to resume work resulting in tight supply of raw materials, coupled with local protection and control measures to restrict logistics, raw material prices have also increased, but the rise is controllable.
Xi Jinping, China`s president, pointed out Sunday at a conference to co-ordinate efforts to prevent and control the outbreak of new corona pneumonia and plan for economic social development.
Mr. Georgieva, the head of the International Monetary Fund, posted last week that the IMF expects China`s economics to bounce back soon if the impact of the new outbreak ends quickly, but if the impact is more severe, the impact on the world will be greater if "China`s economic growth slows more and lasts longer ".
** The short-term impact of non-manufacturing industries is severe, but the recovery will be more rapid **
China`s non-manufacturing PMI, which has long maintained its expansion range, was hit harder by the epidemic, dropping 24.5 points to 29.6 in February, a record low. Analysts believe that the short-term impact of non-manufacturing is more obvious, but later as the epidemic is gradually controlled and tax cuts, rent relief, financing support and other related policy effects continue to release, non-manufacturing industry will show a gradient recovery.
China`s Bureau of Statistics`s Zhao Qinghe said 19 of the 21 sectors surveyed had a business activity index in the contraction zone, but 50.1 in the financial sector continued to expand, playing an important role in the prevention and control of the epidemic and the development of economic society.
"The volume of [financial services] business continues to grow, linked to February`s stock market boom and turnover. "Zhang Deli said.
Cai jin, vice-president of china logistics and procurement union, said the key to restoring economic growth was to start final demand and that the service sector played an important role. After the end of the epidemic, the service industry chain is relatively short, the recovery will be more rapid, and then start the final demand, leverage the industry chain to restore normal parade industry, driving economic recovery growth. The key to the current recovery of economic is to control the epidemic and foster market demand as soon as possible, and promote the normal operation of the industrial chain.
According to the state`s Bureau of Statistics, demand for more crowded consumer sectors, such as transportation, accommodation, catering, tourism, and residential services, all fell below 20. Construction business activity slowed, and the construction business activity index and new orders index fell 33.1 points and 30.0 points from last month. In terms of market expectations, the Operational Activities Expected Index was 41.8, down 22.6 points from the previous month.
However, the expected index of civil engineering construction business activities is 51.8, which remains above the critical point, indicating that the relevant enterprises have confidence in the resumption of development of the industry.
The ongoing epidemic has made China`s lodging, catering, sports and tourism sectors the worst-hit, while these services have the strongest employability. To that end, China is helping these industries to speed up their work and has a series of policies to help them tide over, including a temporary retreat from travel agency bonds to ease their cash flow and other financial, tax and other policy support. (end)
Review school Zhang Xiliang
