Lessons From China On How To Restart An Economy After Coronavirus Peaks
AILSA CHANG, HOST:
China reported no new cases of COVID-19 in the city of Wuhan, which is a milestone in the country's more than two-months battle to contain the virus. But the economic damage that resulted from locking down hundreds of millions of people has become apparent throughout China, and with us to talk about that is NPR's Emily Feng in Beijing.
EMILY FENG, BYLINE: Hey, Ailsa.
CHANG: All right, so no new cases in Wuhan, but quarantine restrictions are still in place throughout China. What are you seeing over there? Are businesses even starting to reopen?
FENG: They are, but very slowly. They've been opening in stages since February 10. More than a month later, about 80% of original economic activity has restarted.
FENG: And I got that 80% figure from Wu Haishan. He's a vice president at WeBank, a digital bank started by tech company Tencent. They've been able to analyze mobile phone geolocation data to figure out if people are moving around cities and working again.
CHANG: Oh, my goodness.
FENG: And he's found that economic restarting is really uneven. The provinces that are best at returning to work are coastal, they're wealthier, they're well-developed in manufacturing and tech sectors. But by contrast...
WU HAISHAN: In the north part of China, because, you know, some cities, they're very close to Wuhan - right? - they're still very good, but it's not as good as the coastal cities in China.
FENG: So he means the cities closest to the epicenter - in Wuhan and surrounding Hubei province - they're still very careful, and they're not allowing businesses to restart.
CHANG: But is there concern that as people go back to work we're going to see a resurgence in new infections?
FENG: Definitely. So health officials say they're not going to declare the outbreak over until there are no new infections reported daily for two weeks straight. And in the interim, restrictions on movement continue, which is, of course, a natural ceiling on economic activity.
China has just shown itself to be very, very willing to sacrifice their economy to prevent a resurgence in infections. I talked to a man named Feng Chucheng, who understands as well. He's a partner at research firm Plenum, and I asked him about this. And he said, you can't have economic growth and containment at the same time.
FENG CHUCHENG: I know the economic cost is huge, but this is very effective. This is also to give people the impression that we are still under the pandemic. The pandemic is still going on. You go back home, wash your hands harder.
FENG: And the U.S. is going to face this same tradeoff, the same conundrum, as it works to contain the virus.
CHANG: It sure is. You know, I'm just thinking here. All of this started getting really bad in Wuhan back in January. So it's been more than two months for China. Even though businesses are slowly coming back to life, how massive of a financial hit has this been on businesses over there and for people?
FENG: It's huge. A number of giant state firms have already slashed new projects. More than 100 real estate firms have already filed for bankruptcy in the first two months of this year. For smaller businesses, it's even worse. A recent survey showed 85% of these cannot survive for more than three months with no revenues. And we're now in the third month of lockdowns.
The latest economic figures - we'll just list some - for the first two months of this year are pretty grim. Urban unemployment jumped a full percentage point. That's the highest on record. Manufacturing activity dropped 13.5%. The last time it was that big of a drop was in 1976, when China went through a bloody political upheaval called the Cultural Revolution. People are spending less, and they're investing less.
CHANG: And just really quickly, what has the Chinese government done to mitigate some of this economic fallout?
FENG: The central bank has made it easier to lend and extend loans. Some people are slashing rent. People are discussing whether to have a stimulus package, but the problem is there's just not a lot left to build infrastructure-wise like they did last time. And with a global pandemic, people are going to be buying less globally.
CHANG: That is NPR's Emily Feng in Beijing.
Thank you, Emily.
FENG: Thanks, Ailsa. Transcript provided by NPR, Copyright NPR.