Coronavirus: China economy set to get worse before better, official warns, as export hit looms

China has reversed some efforts to reopen entertainment venues amid fears of second wave of infections, while exports are set to plunge

Tens of millions of jobs at risk, with one report saying 18 million jobs in exporting industries could be lost due to overseas demand slump

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China’s industrial engine is set for another economic shock, as coronavirus lockdowns around the world hit export demand. Photo: DPA

Published: 6:33pm, 30 Mar 2020Updated: 10:51pm, 30 Mar 2020

China’s economic situation could get worse before it gets better, amid a second wave of demand shock that is set to hit both domestic and foreign trade, a Chinese government official has warned.

Addressing a press conference in Beijing on Monday, the day after President Xi Jinping toured businesses in Zhejiang province, vice-minister of industry and information technology Xin Guobin delivered a candid and downbeat assessment of the economy, in a subtle break from recent optimistic rhetoric about economic recovery.

“With the further spread of the international epidemic, China’s foreign trade situation may further deteriorate,” Xin said. “Overseas and domestic demand are both slumping, having a significant impact on some export-oriented companies. These companies might face a struggle to survive.”

The comments come after Xi said that foreign trade and small businesses must be at the heart of China’s economic recovery, after a horrible first two months of the year, in which economic data plunged to all-time lows across the board.

China is braced for a slump in global demand for the products it ships overseas, as the rest of the world now tries to get a handle on the coronavirus outbreak, two months after China placed large swathes of its own economy on lockdown.

Car companies across the US and Europe are closing factories, with workers unable to staff the production lines, in a situation similar to what happened in China in late-January and February.

Xin warned that many car companies in China could see a drop in production due to insufficient demand, with all eyes now on China’s purchasing managers’ index, which will be released on Tuesday and which will offer some insight as to the status of the ongoing recovery in the world’s second largest economy.