China's economy expected to recover by the end of May

More policies are in the pipeline to fire up economic activities by stimulating consumption and further resuming industrial production in epidemic-hit areas. Due to the strict anti-pandemic measures taken across the country, especially in Shanghai that is under varying degrees of lockdowns, the country's consumption in many services sectors, from tourism to the movie industry, was severely constrained during the five-day holidays from April 30 to May 4, usually an important occasion for businesses to generate revenue.

A total of 160 million people traveled domestically, down 30.2% year-on-year, data from the Ministry of Culture and Tourism showed. Meanwhile, the domestic travel sector generated revenue of CNY64.68 billion over the holidays, down 42.9% year-on-year. Data from China Railway showed that some 32 million passengers are estimated to have traveled by rail from April 28 to May 5, with overall passenger numbers at low levels. Meanwhile, the Civil Aviation Administrative of China (CAAC) said that the number of airline passengers dropped 77% year-on-year to two million. Meanwhile, the country's total box-office revenue stood at CNY140 million in the first two days of the holidays, down nearly 83% year-on-year, according to data from ticketing platform Maoyan.

“As epidemic-hit Shanghai has achieved the goal of eliminating Covid-19 cases at the community level, we can expect an economic recovery as early as the end of May," Cao Heping, Economist from Peking University, told the Global Times. He said that the industrial and financial hub of China is expected to see a rapid rebound once the epidemic is under control, given the city's enormous economic vitality. With the easing of the epidemic situation in Shanghai, local authorities have rushed to roll out a package of measures to reduce the burdens on businesses and guarantee disruption-free supply chains to bolster agricultural and industrial recovery. The production resumption in Shanghai's agriculture sector has surpassed 93%. In addition, China has established a whitelist, authorizing 1,854 companies to resume operation, with key enterprises like SAIC Motor and U.S. carmaker Tesla seeing assembled cars roll off production lines while the production capacity of large semiconductor makers SMIC and Hua Hong Semiconductor is running at over 90%.

Since the worst outbreak in two years hit Shanghai, recent sporadic case spikes in Beijing caught a lot of attention, with all eyes on the Chinese capital to see if the situation would deteriorate as it did in Shanghai, and how economic activities would be impacted during the May Day holidays. Apart from striking a balance between coronavirus suppression and economic development amid the sporadic outbreaks of the highly infectious Omicron variant, experts noted that more macro-economic measures, fiscal stimulus in particular, are needed to bolster businesses and residents' confidence, the Global Times reports.