With the easing epidemic situation, China has led the world in terms of resuming work, reopening schools and returning to normalcy, nearly two months ahead of Europe and the U.S, according to a report by The Telegraph.

The official purchasing manager’s index for the manufacturing sector in China reached 50.8 in April, marking the second consecutive month of manufacturing recovery, according to the National Bureau of Statistics. The index had plunged to 35.7 in February because of the novel coronavirus disease (COVID-19) epidemic.

Industrial production appears to have returned to more normal levels by mid-April, Ma Wenchang, Investment Manager of Ninety One, a Hong Kong-based investment fund company providing services for global clients, told The Telegraph. Chinese experts on investment attribute the progress to the recovery of construction and manufacturing.

But insiders still hold a prudent attitude toward the recovery. They think the consumer spending on services has been weak in China, compared with construction and manufacturing sectors.

Ma said that demand in the services sector is running at just above half of the usual levels in China, despite support from online sales. "Restaurants have placed separation boards on their tables and are only running at 50 percent capacity to reduce the chance of the virus spreading. Entertainment venues, such as cinemas and museums, remain closed across China,” she said.

However Rob Marshall-Lee of BNY Mellon Investment Management told The Telegraph that the easing lockdown restriction in April has led to a rapid rebound in some types of consumption.

“Speaking to many Chinese companies, some are pretty much back to normal. Nike's Chinese stores have all been open for weeks and Dutch company ASML's semiconductor equipment supply chains have also been working well after initial constraints,” he said. Besides, demand for products such as cosmetics seem to have rebounded strongly on pent-up demand and car sales have also shown a sharp V-shaped recovery, he noted. “Cars sales are only down by 3 percent year-on-year in April versus -82 percent in February, so effectively back to normal within two months,” he said.

Andy Rothman, Investment Manager of Matthews Asia, said the recovery of car sales reflects the fact that middle class and wealthy consumers have both sufficient money and enough confidence in the future to spend it, The Telegraph reported.

Marshall-Lee said this may well be indicative of what to expect in Britain, depending on how quickly lockdown restrictions ease and the extent of the impact of economic downturn on consumer incomes, jobs and confidence in the future.

Copyedited by Madhusudan Chaubey 

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