Chinese Economy Makes Surprise Rebound in March

Economic data published Tuesday showed that China’s manufacturing and services sectors both expanded in March, following the February lockdown caused by the coronavirus outbreak. But the World Bank warned of further weakness.

China’s official Purchasing Managers’ Index, published by the National Bureau of Statistics, showed a figure of 52.3 for March, a measure where 50 is neutral and a smaller number indicates contraction. After growth in January, the index plunged to 29.6 in February, as services ranging from transport to retail were halted by government and provincial measures taken to limit the spread of the disease.

The manufacturing sector PMI for March showed a figure of 52 for March, compared with 39.7 in February. That is a higher and faster rebound than had been anticipated by many analysts. A Reuters poll of forecasters came up with a consensus estimate of 45, indicating that they anticipated further contraction.

The news propelled shares higher on Asian stock markets on Tuesday, notably in mainland China and in Hong Kong, where the Hang Seng Index rose 1.2% to 23,455 mid-morning. “Asia appears to be showing signs of post-coronavirus life this morning, with data released from across the region showing some pleasing signs of a rebound. The results are doubly pleasing as the resurgence is broadly based across the key economies of the region, and not just China, bringing a welcome respite from months of virus doom and gloom,” Jeffrey Halley, Asia Pacific senior market analyst at OANDA, told the South China Morning Post.

But the World Bank, in a forecast prepared before the publication of the latest Chinese data, warned that slowdown in other parts of the world could snuff out China’s recovery. Roughly 40% of the world’s population is currently affected by some kind of lockdown.

“(The coronavirus outbreak is”) an unprecedented global shock, which could bring growth to a halt and could increase poverty across the region,” said Aaditya Mattoo, World Bank chief economist for East Asia and the Pacific.

Even in China the recovery is expected to be uneven. While several film and TV companies have been back at work for weeks – Huayi Bros staff have been in their offices since March 1, Legendary Entertainment, China Film Group and Imax China have also been working from their offices for most of the month – cinemas remain closed nationwide.

Transport networks have restarted in Wuhan, the original epicenter of the coronavirus outbreak, but some restrictions in and around Beijing remain, and international air transport has been slashed.
Wanda, which is both the world’s largest cinemas group and China’s biggest operator of shopping malls, said that Chinese consumers are beginning to venture out of their homes again.

“As of March 22, 321 out of the 325 Wanda Plazas across China have resumed business. The average customer flow in Wanda Plazas has bounced back, reaching 83% of the level seen in the same period last year,” Wanda said in a statement.

Cinemas, kids’ and other entertainment facilities within the malls have not reopened. Shenzhen-traded shares in Wanda Film, which owns Wanda’s mainland Chinese cinemas, lost 7% on Monday. They lost a further 2% on Tuesday morning.

While Wanda said it has “full confidence that all economic indicators of Wanda Plazas will soon return to levels seen before the pandemic,” it also explained that spending remains low. “Average sales (at) Wanda Plazas across China have reached 60% of the level from the same period last year,” it said.

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