Some citizens in Shijiazhuang, the capital of northern Hebei province and the epicentre of China’s biggest coronavirus outbreak in months, have had to turn to online bartering to get the products they need amid a lockdown of the city. “I have meat at home and want to exchange it for some eggs, would anyone like to do this,” one post asked on the WeChat messaging service last weekend. “I have facial masks, also want to exchange for some eggs,” said another post by a resident in a community in downtown Shijiazhuang. The citywide lockdown that went into effect on January 6 quickly brought lives to a standstill, and the bartering system is the only way some can obtain daily necessities. Yang Hong, a resident of the community, said that the lockdown came so suddenly that many local people were totally unprepared. He could not get fresh vegetables until Sunday, when he was forced to venture out in the midst of the coldest weather in years , with temperatures plunging below freezing. China’s consumer inflation turned positive in December on higher food prices “My work has stagnated, the company is stalling,” said Yang, in his thirties, who manages a home-appliance market in the provincial capital. “There was a person in our community who tested positive. I’m afraid the lockdown will last for a long time.” In mid-December, China’s top leadership commended the nation’s “historic achievement” in overcoming the economic impact of the coronavirus in 2020. China’s economy rebounded quickly and is expected to be the only major economy in the world to have posted positive growth last year. But merely half a month later, amid a rapid resurgence of Covid-19 in Hebei province, which mostly surrounds Beijing, strict lockdowns and nationwide bans on travel and gatherings have returned just a few weeks before the Lunar New Year holiday that begins on February 11, underscoring the pandemic’s protracted impact on the world’s second-largest economy. Strong consumer spending is one of the key elements in China’s new dual-circulation economic strategy , which relies more on domestic demand to power overall economic growth in the future. The Spring Festival, as it is known in China, is traditionally a time when millions of workers and students return to their hometowns to visit family, bringing gifts and enjoying large feasts over the week-long holiday. Analysts are warning that consumer spending during the festive season could be weaker than expected, which would put downward pressure on economic growth in the first quarter. Still, the impact appears to be controllable, to a certain extent. China’s economy is expected to record a double-digit growth rate in the first three months of 2021, due in good part to last year’s low base for the year-over-year calculation. In the first quarter of 2020, its economy contracted by 6.8 per cent from a year earlier – the first negative growth rate in decades. The resurgence of the coronavirus, and the measures that Chinese authorities are taking to contain it, could reduce first-quarter growth. The National Health Commission said in a statement on Wednesday that 115 new confirmed cases were reported on the mainland compared with 55 a day earlier. This was the highest daily increase since July 30. The commission said 107 of the new cases were local infections. Hebei accounted for 90 of the cases, while northeastern Heilongjiang province reported 16 new cases. The fresh outbreaks serve as a wake-up call for the whole country. Chinese urged not to make ‘unnecessary’ trips home for Lunar New Year Authorities are already talking about restricting travel during the Spring Festival rush – the largest annual human migration on the planet. In the latest sign of the infection spreading across provincial borders, Haining, a city between Shanghai and Hangzhou in Zhejiang province, confirmed one asymptomatic case on Wednesday, connecting it to the Hebei outbreak. In a meeting on Friday, Chinese Premier Li Keqiang declared that the country must “resolutely curb the spread of the pandemic”. Afterward, the State Council, China’s cabinet, assembled a special team to supervise pandemic controls during the annual travel rush that is expected to extend from late January to early March this year. Transport Minister Li Xiaopeng, who is leading the team, told its members on Sunday that their aim is “to cut unnecessary travel , reduce gatherings of people” and take advance steps to “control the volume” of those looking to travel at peak times. It is probable that consumption over the Spring Festival holiday will be down from what it would have been, absent this most recent outbreak Joe Mazur, Trivium China Li Xiaopeng’s message came only 10 days after China State Railway Group said it expected to carry 407 million passengers during the 40-day mass movement of people – almost double the 210 million passengers during the period last year. Joe Mazur, a Beijing-based analyst at consultancy Trivium China, said: “Containing the [coronavirus] spread will be policymakers’ first priority, but keeping the economic recovery on track will be a close second, and that will be reflected in authorities’ handling of this latest resurgence. “It is probable that consumption over the Spring Festival holiday will be down from what it would have been, absent this most recent outbreak, since officials in certain parts of the country have already advised against holiday travel.” Ernan Cui, a China analyst at research firm Gavekal Dragonomics, echoed that sentiment, saying: “Overall consumption during the Chinese New Year is likely to still be weaker than pre-Covid levels.” The rapid rise in new cases and subsequent precautions are likely to further delay the recovery of consumer spending, especially on services such as restaurants, hotels and entertainment, she said. Nearly all Chinese provinces and dozens of municipal governments, including Beijing, Shanghai and Shenzhen, have issued instructions encouraging the public, especially government workers, employees of state-owned enterprises and schoolteachers, to avoid travelling back to their hometowns during the coming holiday period. Beijing city announced on Friday that it would ban all mass celebrations and large in-person sales activities before and after the Lunar New Year. Eastern Jiangxi province said on Tuesday that it would cancel all large-scale corporative activities, including parties and annual dinners – a step also been taken by other provinces. The pace of consumer spending during the Lunar New Year holiday season at the beginning of each year has long been seen as a barometer of overall Chinese consumption. In 2019, prior to the pandemic, retail sales in the January-February period accounted for 16 per cent of the annual sales total, according to data from the National Bureau of Statistics (NBS). “With the worsening virus situation and the coldest winter in decades, the growth recovery lost some momentum in recent weeks. A full recovery in the services sector could be delayed,” warned Lu Ting, chief China economist at securities firm Nomura, in a note on Monday. China’s services sector activity expanded at slower pace in December as outbreaks tempered recovery There were some signs of weakening consumption late last year, even before the current virus outbreak. Revenue in the catering sector dropped back 0.6 per cent in November compared with a year earlier, after a year-on-year rebound of 0.8 per cent in October. Chinese gross domestic product (GDP) was projected to rise 2.4 per cent in 2020 and 8.5 per cent this year, with final consumption rising between 10.7 per cent and 11.7 per cent this year, according to a report released by the Centre for Forecasting Science at the Chinese Academy of Sciences on Friday. But these forecasts were made on the precondition that “the pandemic in China continues to be effectively controlled without severe resurgences”. The uncertainty resulting from the pandemic, the slow growth in household income, and the rising level of household debt may restrict China’s consumption growth this year, the report said. Nomura’s Lu said that although the lockdown might not significantly affect capital-intensive steel production in Hebei, shipments of steel products from Hebei to the rest of the nation could be delayed to some extent, likely weighing on manufacturing and construction activities in other regions. Chinese steelmaking hub hit by coronavirus, with highway closures reducing output and delivery Hebei is China’s largest steel-producing province, accounting for 24.3 per cent of China’s crude steel output in 2019, according to NBS data. Lu said the deteriorating coronavirus conditions could pose some downside risk to Nomura’s forecast for 2021’s first-quarter year-on-year growth rate, which the firm is currently estimating to be 19 per cent. Yet, Trivium China’s Mazur said it was still too soon to speculate as to whether policymakers will have to revise down first-quarter growth figures, since it remains unclear how big the outbreak will get. “Any revisions to the first-quarter 2021 numbers would almost certainly be marginal,” he said. Gavekal’s Cui agreed that the impact on the national GDP in the first quarter was likely to be limited, as the outbreak was still concentrated in a few cities, and since most markets across the country, especially in the south, had hardly seen any direct impact. “So far, the situation looks like it is still under control,” she said. A factory manager surnamed Wang at Handan Iron and Steel Group in Hebei, also known as Hansteel, said: “Currently, there has been no big impact on production.” January is generally an off-season for steel production, and the factory is focusing on facilities maintenance at the moment, Wang added. “Even when the pandemic first broke out last year, our production continued to operate … there has been no change in planned output,” he said.