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
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.
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.
In addition, the figures concerning firms that have resumed operation overlook the level of production within a specific factory, as the official data classes a factory that may have only resumed slightly more than half of its capacity as having resumed production.
However, at a key highway construction project, only 60 per cent of the workers had returned, the newspaper said.
A monthly survey of small and medium-sized enterprises (SMEs) in China, conducted by Standard Chartered Bank for the period up to the start of last week, found that firms were on average operating at 42 per cent, while only 47 per cent of workers had returned on average.
“Surveyed SMEs expect full production to resume in April and almost all workers to return to work in March, although some foresee more time needed for sales to recover,” the bank said on Monday.
Last week, China’s state-owned electricity utility monopoly launched an electricity resumption index, aimed at measuring the number of companies that have reopened for business and the amount of electricity they consume.
According to State Grid, the power usage in the key textile and machinery manufacturing hub of Zhejiang province was at 34.77 as of Tuesday, up from 24.79 on February 9, but still well below a reading of 88.68 at the same period last year.
Additional reporting by Reuters
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