China Is Bouncing Back, but Can We Trust Its Numbers?

China's economy looks to be well on its way to recovering from the coronavirus-imposed lockdown. A return to normal may not happen until next year, but consumer spending, manufacturing and investment appear to be all bouncing back strongly. This raises the perennial question, “Can we trust China's macro numbers?” A look at sales data from multi-nationals (MNCs) doing business there suggests that China's retail sales growth rates are realistic.

All of us at Matthews Asia send our sympathies to everyone effected by COVID-19, either directly or indirectly, and we extend our gratitude to all health care professionals, scientists and service providers who are diligently working to help and provide care to those in need around the world.

Progress towards controlling COVID-19 is key

When thinking about prospects for the Chinese economy, one of the most important factors is whether the coronavirus remains under control. At this point, China appears to have wrestled COVID-19 into submission. On May 14, only 91 coronavirus patients were in hospital, down from the February 17 peak of 58,016. The recovery rate is now 94% across China, up from 12% three months ago.

China began gradually lifting social distancing and other restrictions for areas outside of Hubei Province (where Wuhan is the capital city, and where the virus was first identified) on February 9. During the 14 days prior to that date, the average daily number of new COVID-19 cases was 657, and the average daily number of deaths was two, both for China ex-Hubei. In contrast, during the 14 days ending May 17, there was an average of five new daily cases and a total of one death due to COVID-19 in China ex-Hubei.

The social distancing restrictions began to be lifted in Wuhan on April 8. During the 14 days prior to that date, there were a total of only two new COVID-19 cases, and the average daily number of deaths was three. During the 14 days ending May 17, there were a total of six new cases and zero deaths due to COVID-19 in Wuhan.

(During the 14 days ending May 17, there was an average of 24,253 new daily cases and 1,599 daily deaths in the U.S., and an average of 4,078 new daily cases and 442 daily deaths in the U.K.)

It is also encouraging that two weeks after a five-day national holiday in China, when over 100 million people traveled for leisure, there has not been a spike in COVID-19 cases.

As in other countries, the potential for a rebound in coronavirus cases is the biggest risk to a post-lockdown economic recovery, but, at the moment, a combination of testing, contact tracing and social distancing seems to be keeping the virus at bay.

And, it is worth noting that the rate of COVID-19 deaths per 100,000 population in China (0.3) is similar to that of some other countries in the region: Singapore (0.4), South Korea (0.5), and Japan (0.6).