Coronavirus: China likely overestimating economic recovery by leaving out hard-hit small businesses

Official figures only cover larger firms with an annual turnover of over 20 million yuan (US$2.85 million)

Officials on Monday claimed 90 per cent of industrial enterprises in Zhejiang province had resumed operation

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Authorities have responded to calls from President Xi Jinping to restore China’s economic and social activity to pre-coronavirus levels by publishing a new indicator on the ratio of production that has resumed operation. Photo: AP

Published: 9:00pm, 24 Feb 2020Updated: 11:22pm, 24 Feb 2020

China’s economic recovery amid the coronavirus outbreak has likely been overstated as data only covers larger companies and excludes the vast majority of the smaller workshops and manufacturers.

Authorities have responded to calls from President Xi Jinping to restore China’s economic and social activity to pre-coronavirus levels by publishing a new indicator on the ratio of production that has resumed operation.

On Monday, National Development and Reform Commission spokesman Cong Liang said that over 90 per cent of industrial enterprises in Zhejiang province, one of the country’s top manufacturing bases, had resumed operation. According to Cong, over 70 per cent of production in the manufacturing and export hubs of Guangdong, Jiangsu, Shandong and Liaoning had also restarted.

However, the official figures only cover larger firms, namely enterprises with capacities “above state designated sizes”, which are enterprises that have a minimum annual turnover of 20 million yuan (US$2.85 million), according to the government’s official definition.

China’s state statistics system normally only covers industrial enterprises with an annual turnover above this level as they accounted for around 90 per cent of the nation’s output in terms of value.