Indeed, many observers expect to see a rapid recovery in China once the virus is contained. As Kristalina Georgieva, who heads the International Monetary Fund, put it: “If the disruptions from the virus end quickly, we expect the Chinese economy to bounce back soon.”

Part of the reason for their optimism is that Chinese consumers reduced their discretionary spending last year, largely because of the US-China trade war. For instance, a survey in October 2019 found that about 40 per cent of respondents had cut back on their entertainment spending during the second quarter to save money.

A recovery from the Covid-19 crisis could be seen as a delayed recovery from the uncertainties of the US-China trade war.

This survey posed one of three scenarios to survey respondents: an optimistic case where the number of new infections started declining as soon as late February, a middle-of-the-road case where China recovered fully by the summer, and a pessimistic case where a severe crisis lingered through the year.

Comparing buying intentions in different consumer segments across these scenarios, the study identified three key insights about the shape of the recovery.

First, consumers agree with economists about the potential for a recovery. Although the study found that consumers considered Covid-19 a severe crisis and expected a complete normalisation to take four to five months, the study also found that six out of 10 intend to spend more during March to May 2020 than the corresponding period last year, regardless of the scenario. This suggests pent-up demand within China’s Tier-1 cities that should fuel a recovery when it arrives.

More interestingly, the recovery might be excellent for some categories of consumer goods but lacklustre for others. The study found that demand for the goods generally fit one of three patterns. Some categories (for example, household goods) do well regardless of the scenario.

Other categories do reasonably well under the optimistic scenario – but do worse under the more pessimistic scenarios. Travel epitomises this pattern; while spending on travel increases marginally from the same period in 2019 under the optimistic case, it collapses under the middle and pessimistic cases. Luxury goods also fit this pattern for the buyers who could afford them.

What I found particularly interesting was a third pattern driven by the psychology of confinement. Spending on packaged foods increased robustly through the optimistic and middle case scenarios but increased much less under the pessimistic scenario.

This may reflect consumers’ willingness to tolerate a diet of packaged foods – but only temporarily before they sought the groceries needed for a proper meal. Conversely, spending on alcoholic beverages increased slightly as the scenarios grew more pessimistic.

A third insight revolves around the move towards online channels. While the crisis has accelerated an existing shift towards online marketplaces, the findings suggest that there may not be much more room to bring consumers even further online.

When asked about their willingness to make purchases online, survey respondents indicated that they would buy some types of goods more often online than offline – the same categories that they would spend more on this year than last.

Coronavirus outbreak could sink Hong Kong retail sales by 50 per cent

What is unknown is whether the shift online will be permanent or temporary – to what extent will consumers move back offline for categories where service, experience and fit are important, such as luxury goods?

Overall, consumer-facing businesses in Hong Kong and on the mainland need to plan beyond the crisis to position themselves for a recovery. We do not know how quickly the recovery will materialise; while the situation in China appears to be heading in the right direction, the spread of the virus elsewhere raises concerns about the broader global economy.

The volatility of these circumstances highlights the need to closely track consumer sentiment and pounce on the recovery at the right time.

Joon Nak Choi is chairman and co-founder of Zectr.io and an adjunct assistant professor and Institute for Emerging Market Studies Faculty Fellow at the Hong Kong University of Science and Technology