Containers and trucks in the port of Qingdao, China on February 14, 2019.
BEIJING – China has not fully recovered from the shock of the coronavirus pandemic, business leaders said in a poll by the China Beige Book released Tuesday.
After about a year since Covid-19 appeared in the Chinese city of Wuhan, around two-thirds of executives surveyed by the third-party firm said sales, profitability and hiring would only return to 2019 levels after at least three months.
China Beige Book conducted more than 3,300 interviews between November 12 and December 11 in its latest quarterly business survey.
Credit Concerns and Trade Tensions
In the fourth quarter, the China Beige Book saw a sharp drop in sales growth in luxury goods, food and apparel compared to the previous quarter.
"Companies in these subsectors saw lower margins, as well as weaker sales volumes and hiring growth," the report said.
This was in contrast to the better performance of auto dealers and furniture and appliance suppliers, suggesting that richer households could increase overall consumption by spending on big-ticket items, according to the Beige Book.
Creditors were also more concerned about retail stores. While the loan rejection rate remained relatively constant in most sectors – around 10% to 20% – that of retail rose to 38% in the fourth quarter, the report said.
Domestic demand is an integral part of Beijing's plan for sustainable economic growth in the years to come. China has tried to rely more on its own consumers than on exports for growth, especially given mounting tensions with key trading partners like the US.
China is still a bright spot, but the outlook is preliminary
In the services sector, the China Beige Book also found that the gains in the fourth quarter were not driven by consumers but by industries that meet business needs such as telecommunications, shipping and financial services.
Chain restaurants did not see as much growth, while travel did not see any growth and hospitality saw the weakest revenue, the report said.
The Beige Book also indicated that China's imports have stalled relative to an increase in exports since an initial rebound after the shock of the first quarter.
The Chinese market remains a ray of hope for companies worldwide after the country managed to control the outbreak domestically and return to overall growth in the second quarter.
But scattered Covid-19 cases, most recently in the capital Beijing in the past two weeks, as well as the continued spread of the virus overseas, mean the pandemic is a source of uncertainty for Chinese authorities and businesses.
China's full-year 2020 economic data will be released on Jan. 18, according to the National Bureau of Statistics website.