Coronavirus: China’s excavator sales soar as Beijing opts for old-school economic stimulus

Sales of the engineering vehicle widely used in construction by Chinese manufacturers surged 11.6 per cent in March, while domestic sales rose 11.2 per cent

Increase could show stimulus efforts of showering money on local authorities and flooding the banking system with cheap credit could be stronger than believed

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In the first two months of 2020, China’s investment, consumption and exports plunged, but there are signs that activities at China’s large-scale industrial enterprises and construction sites have returned to normal in March. Photo: Weibo

Published: 9:30pm, 15 Apr 2020Updated: 9:48pm, 15 Apr 2020

Sales of excavators, an engineering vehicle widely used in construction, soared in China in March in a strong sign that Beijing is relying on infrastructure spending to offset the economic shocks caused by the coronavirus pandemic.

Sales by Chinese manufacturers surged 11.6 per cent from a year earlier to 49,408 units, according to data released by the China Construction Machinery Association, while domestic sales rose 11.2 per cent year on year to 46,610 units last month.

It marked a strong rebound from the 50.5 per cent fall in February when the country’s production and construction activities were largely frozen.

The increase in sales could also show that China’s stimulus efforts, involving showering money on local authorities and flooding the banking system with cheap credit – a similar approach adopted in 2008 to spur growth amid the global financial crisis – could be stronger than believed. This in turn would help engineer a rebound in the world’s second largest economy even though exports orders are disappearing.

China is scheduled to release its gross domestic product growth rate for the first quarter on Friday, likely to confirm speculation that China has suffered its first economic contraction since 1976.

In the first two months of 2020, China’s investment, consumption and exports plunged, but there are signs that activity at China’s large-scale industrial enterprises and construction sites have returned to normal in March.

Excavator sales performance is often seen as a leading parameter of investment as the equipment is widely used from road to property construction. In 2009, sales surged 23 per cent to 95,000 units as Beijing’s stimulus plan turned large parts of the country into a massive construction site.