Four China Trends

Four important trends are continuing in China: COVD-19 remains largely under control; the economy is in a V-shaped, post-COVID recovery, led by strong domestic demand; U.S.-China relations are tense and likely to worsen; but the political problems between Washington and Beijing should continue to have little impact on China's economy or its investment environment.

All of us at Matthews Asia send our sympathies to everyone affected 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.

Trend 1: Controlling COVID-19

Keeping the coronavirus under control is key to maintaining the economic recovery, and there are reasons to be optimistic. In the first 12 days of August, there were a total of only 420 new COVID-19 cases in China, and of those, only 262 were the result of local transmission (the others were among people who had arrived from abroad with the disease). In contrast, during the first 12 days of August, there were 651,880 new cases in the U.S. and 10,617 in the UK.

On August 12, there were 724 patients in Chinese hospitals with COVID-19, down from 58,016 on the February 17 peak. On August 12, there were 47,919 COVID patients in U.S. hospitals and 1,001 patients in hospitals in England. In the first 12 days of August, there were no COVID deaths in China. During that period of time, there were 12,305 COVID deaths in the U.S. and 140 in the UK.

I know that some investors wonder whether the Chinese government's COVID data can be trusted. I think there are two reasons to believe that since January 23—when the government shut down the city of Wuhan, where the virus was first identified, and which has a population larger than that of New York City—the Chinese government has not been deliberately falsifying its COVID data.

First, if the number of hospitalizations and deaths were significantly higher than the official statistics, we would be hearing about it on social media from the family and friends of those patients. Second, the numbers reported by China have been consistent with data from other places in the region which undertook similarly aggressive efforts to control the virus. For example, Japan has reported only 53 deaths in the first 12 days of August, and a total rate of COVID-19 deaths per one million population of eight (the rate is three per one million population in China). South Korea has reported four deaths in the first 12 days of the month and a mortality rate of six per one million population. Thailand has reported no deaths this month and a mortality rate of 0.8. Taiwan has reported no deaths this month and a mortality rate of 0.3. New Zealand has also reported no deaths this month and a mortality rate of four per one million population.