It was more than foreseeable that the corona shutdown in China would result in massive economic losses. However, it was difficult to estimate how large the losses would be and even more difficult to predict whether the Chinese leadership would even reveal the full extent of the collapse. Even the announcement of the record-low purchasing managers‘ indices two weeks ago came as a certain surprise. The now published growth figures from industry, retail trade and construction reflect the devastating mood polls of February: economic activity has collapsed in the double-digit percentage range.
Industrial production contracted by a quarter in February compared to the already weak previous month. Output in January and February combined was more than 13 percent below the level of the same period in 2019, while retail sales fell by more than 20 percent year-on-year. Taking into account the currently high inflation, they are likely to have collapsed by around a quarter in real terms. Construction activity is also posting losses of almost a quarter compared to the previous year.
The figures are plausible. The industry has lost ten percent of February production due to the extended New Year holidays alone, and many companies remained closed until the end of the month. In the retail sector, one could have imagined an even greater minus, given the collapse of car sales by almost 80 percent. Overall, however, there is little to suggest that the figures have been politically improved, as is so often the case in China.
For the first quarter as a whole, however, this means that we have to prepare ourselves for much weaker figures than we had previously assumed. Anything other than a minus in the politically sensitive annual rate of economic growth is no longer conceivable in the meantime. Although China has now significantly eased the rigorous restrictions on public life, the country is still a long way from normality, if only because it is now sealing itself off from outside health threats.