Hector Retamal | Afp | Getty Images BEIJING – As mainland China faces its worst Covid-19 outbreak in two years, a measure of consumer spending has fallen to levels not seen since the initial pandemic shock. Travel restrictions and district or city lockdowns discouraged people from traveling during a public holiday that ran from Sunday to Tuesday. And tourism spending by those who dared to go outside recovered just over a third, or 39.2%, of the level observed during the holidays in 2019, according to the Ministry of Culture and Tourism. This is a much slower pace than during the Lunar New Year holidays earlier in the year, when tourism spending was 56.3% than it was in 2019. For more than three weeks, the number of Covid cases in mainland China with symptoms has exceeded 1,000 a day and has reached areas across the country. The number of asymptomatic cases is much higher. Shanghai, the country’s largest city, is one of the hardest hit in China’s highly contagious omicron variant. The metropolis was due to end a two-party lockdown on Tuesday, but earlier this week gave no indication as to when the restrictions would be lifted. Markets could underestimate the financial loss [from Covid]. Ting Lu Chief Economist of China, Nomura In all, about 193 million people in the country live in full or partial lockdown, in areas that account for about 22% of China’s GDP, Nomura’s chief economist for China, Ting Lu, estimated in a report on Tuesday. “Markets could underestimate the financial loss,” he said. “China [zero-Covid strategy] “It can save many lives, especially among the elderly, but it also entails significant financial costs and causes collateral damage to people who cannot receive regular medical care for diseases other than Covid.” “Unlike in the spring of 2020, when there was a general belief that Covid-19 would end in the summer, we are not seeing an end at the moment; this has increased uncertainty, which is quite negative for investment,” Lu said. . The number of cases and deaths from Covid in mainland China remains lower than in other major countries. The country’s largest factories have managed to maintain production by keeping staff on site, with economists expecting the service sector to remain the most affected. The Shanghai Disney Resort, which has been closed for more than two weeks, said Wednesday that its theme parks and hotels remain closed until further notice. Revenue from tourism for the weekend ended 30.9% year-on-year to 18.78 billion yuan ($ 2.93 billion), the ministry said. Tourist travel fell by 26.2% from the same period last year to 75.4 million, or 68% of the pre-pandemic level, according to the data. People who were able to travel during the holidays mostly booked trips to scenic places near or in the countryside, according to the booking site Trip.com. In a country dominated by e-shopping, Covid also influenced parcel delivery. The number of parcels received and delivered during the holidays was down about 13% each from a year earlier, according to the State Post Bureau. It was not immediately clear whether logistics barriers or consumer demand were the main reason for the decline.
The optimism of service companies is falling
The Caixin Services Markets Index (PMI), a measure of market conditions, showed on Wednesday that business activity in the industry shrank in March at the sharpest pace in two years. “Companies have often reported that stricter anti-virus measures had disrupted operations and weighed on customer demand in March,” Caixin said in a statement. For the third month in a row, data showed that service companies were reluctant to hire more staff. Businesses remained generally optimistic about growth over the next 12 months. However, the statement said that the level of optimism fell to its lowest level since the second half of 2020 “amid concerns about how long the business will be affected by the pandemic and the war in Ukraine.”
