Slow but steady: China fights to get economy back to work

[BEIJING] China is making slow but steady progress in its effort to get back to work, as it battles the coronavirus outbreak that has killed almost 3,000 people and sickened tens of thousands.

Government controls and the fear of going outside have curtailed spending, and many factories are still not working at full capacity due to clogged logistics systems, a lack of staff, or limited supplies and raw materials.

However, activity seems to be picking up, with the economy likely running at 60 per cent to 70 per cent capacity last week, according to a Bloomberg Economics report, up from about 50 per cent earlier in February. The following data tracks how much of the world's second-largest economy remains out of action.

INDUSTRIAL DEMAND

Some companies, especially large state-owned industrial firms and those making medical equipment, have ramped up output. Demand for coal to make electricity is the highest it's been since Jan 24, but it's still well below where it should be at this time of year. Along with anecdotal reports from across China's vast east-coast manufacturing heartland, the power numbers suggest much of the nation's industrial capacity remains idle or is running at less than full capacity.

That rise in electricity demand may not be a perfect indicator of increasing production. Some cities have given businesses targets for energy consumption because the government is using electricity data to show a resurgence in output, prompting some firms to run machinery even though the plant is empty and not producing anything, according to people familiar with the matter.

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However emissions of pollution from industrial activity confirms the same trend as electricity output - dropping after the Chinese New Year and slowly recovering. Although levels of nitrogen dioxide in the atmosphere are lower than they would normally be at this time of year, they have started to pick up, according to the Centre for Research on Energy and Clean Air, which cited satellite data.

AIR POLLUTION VANISHES

Companies are returning but not at full capacity. Toyota Motor Corp has now restarted production at all its factories in China, but is only running a single shift this week at three of its the four plants, according to a statement from the company. The remaining factory is running a partial double shift, and the firm previously said it won't resume normal operations until it's safe and appropriate.

In a survey of over 150 American companies in China in mid-February, only about 18 per cent said they would be back to normal by the end of last month, with another 28 per cent expecting that would happen by the end of March.

The slowdown of refineries and dropping demand has led to larger stockpiles of crude oil.

However imports of liquefied natural gas are showing signs of life, rebounding last week to near the levels of mid-January.

MOVING GOODS AND PEOPLE

About the same number of trips by planes, trains, vehicles and boats were taken in the run up to the Chinese New Year this year compared to last year, but the fall off since the first day of the Year of the Rat on Jan 25 was stark. And with long-distance buses only allowed to operate at 50 per cent capacity to reduce the risks of viral transmission, that backlog will take a long time to clear.

Highway traffic last week has started picking up and some 27 provinces and regions have restored inter-provincial passenger bus services, and 26 provinces including Zhejiang and Fujian have organised chartered buses to return migrant workers to their workplaces.

About 200 million migrant workers would have returned to where they work by the end of February, transport ministry official Liu Xiaoming said in Beijing on Feb 15. Another 100 million will return from March onwards, according to Mr Liu.

Sichuan, one of the major sources of migrant workers, has sent almost nine million migrant workers back to work as at March 1 - about 44 per cent of the province's total migrant worker population. More than five million workers from both Henan and Hunan provinces have returned to work, and about two million from Guizhou had also gone back by around the end of February, according to Chinese state media.

BLOOMBERG