The Chinese economy is still a few months away from a full recovery, the business survey finds

BEIJING – China has not fully recovered from the shock of the coronavirus pandemic, business leaders said in a survey by the China Beige Book released on Tuesday.

After about a year since the first Covid-19 originated in the Chinese city of Wuhan, about two-thirds of third-party executives surveyed said they do not expect sales, profitability and leasing until 2019 will return for at least three months from now.

China Beige Book conducted more than 3,300 interviews between November 12 and December 11 in its latest quarterly business activity survey.

In the fourth quarter, the China Beige Book showed a sharp decline in sales growth for luxury goods, food and clothing compared to the previous quarter.

“Businesses in these sub-sectors have seen smaller margins, as well as weaker sales volumes and rental growth,” the report said.

This was in contrast to the better performance of car dealers and sellers for furniture and appliances, suggesting that richer households can increase overall consumption by spending on items with large tickets, the Beige Book said.

Creditors were also more concerned about retail businesses. While the loan rejection rate was fairly stable in most sectors – around 10 to 20% – the retail industry rose to 38% in the fourth quarter, the report said.

Local demand is an important part of Beijing’s plan for sustainable economic growth in the coming years. China has tried to rely more on its own consumers for growth, rather than exports, especially amid heightened tensions with major trading partners such as the US.

In the services sector, the China Beige Book also found that profits in the fourth quarter are not driven by consumers, but by industries that meet the operational needs such as telecommunications, shipping and financial services.

Chain restaurants did not see as much growth, while travel saw no growth and hospitality recorded the weakest revenue, the report said.

The Beige Book also pointed out that China’s imports have come to a standstill since the initial recovery from the shock of the first quarter, compared to an increase in exports.

The Chinese market remains a bright spot for companies worldwide after the country was able to control the domestic outbreak and return to overall growth in the second quarter.

But widespread Covid-19 cases, over the past two weeks in the capital Beijing, as well as the persistent spread of the virus overseas, mean the pandemic is an uncertainty for Chinese authorities and businesses.

According to the website of the National Bureau of Statistics, China’s economic data for 2020 will appear on 18 January.