Inside China Tech: China’s business (and smog) comes back

Some of our top stories this week show how China’s economy is recovering as the country emerges from its coronavirus lockdowns
At the same time, satellite images and air quality index data show that hazy air is returning to parts of China as production resumes

China technology

Melissa Zhu

Published: 8:00am, 9 May 2020

Why you can trust SCMP

Good morning, this is Melissa Zhu from the SCMP tech desk in Hong Kong with a wrap of some of our best stories from this week.

First, the bad news. After Wuhan lifted its lockdown in early April and Beijing downgraded its emergency response level last month, satellite images and air quality index (AQI) data are showing a return of air pollution to parts of China, as Coco Feng reports.

China's air quality had improved in recent months as result of recent lockdowns and industrial stoppages related to the Covid-19 pandemic, but the data shows that this was probably just a temporary phase before the country got back to work.

Nitrogen dioxide (NO2), which is produced by combustion engines and burning fossil fuels, fell in Wuhan – the initial epicentre of the Covid-19 outbreak in China – during the 20-day period starting January 21 compared with the previous 20-day cycle, according to a coloured satellite map compiled by the European Environmental Bureau (EEB), a regional network of environmental organisations.

After the Chinese authorities blocked people from leaving or entering Wuhan on January 23, NO2 levels remained static at lower levels (below 150 micromoles per square metre (umol/m2) until late March.

Air pollution returns to parts of China as Covid-19 lockdown ends

But during the 20-day period that ended April 9, a day after the lockdown was cancelled, levels spiked back to about 300 umol/m2 in the most polluted areas of the city, according to the EEB map, which showed a similar pollution curve for areas surrounding Beijing, Shanghai and Guangzhou.

In February, levels of the most harmful atmospheric particulate matter (known as PM2.5) in Beijing significantly improved, with only three days of “very unhealthy” air and six days of “good air”. There were no “very unhealthy” days in March and April.

However, in the first seven days of May, as social activities picked up during the five-day Labour Day holiday, there have so far been no “good” air quality days, according to aqicn.org, an AQI aggregator of various local observer and monitor sources.

With the haze coming back, some might choose to keep their masks on even after the pandemic threat blows over – and not just in China.

“During this pandemic, what happens in China has often been a window for what happens elsewhere sometime later,” warned EEB air policy officer Margherita Tolotto, who called for action in other regions, such as in Europe, to avoid repeating China's story.

Hey, big spender

But smog or no, the increasing resumption of businesses and production in China also brings hope for the economy, which has suffered a slowdown in consumer spending during the outbreak.

Offline retailers have been hit particularly hard, as shopping malls, stores and restaurants were closed or had to severely curtail their businesses.

In Shanghai, authorities kicked off a two-month shopping festival to “boost consumer confidence and unleash the potential of consumer demand”.

The response has been encouraging: within 24 hours of its launch on Monday evening, the Double Five shopping festival pulled in 15.6 billion yuan (US$2.2 billion) in sales, our reporter Yujie Xue writes.

Shanghai shopping festival sees US$2.2 billion of sales in first 24 hours

Combined sales from the city’s online and offline channels soared to 2.3 billion yuan within the first four hours after the festival started and crossed the 10 billion yuan mark 20 hours after the event launched, according to English-language newspaper Shanghai Daily, citing the Shanghai Commerce Commission.

By 10am on Tuesday – 14 hours after the festival started – some outlets of Alibaba Group Holding’s online-to-offline supermarket chain Freshippo were wiped clean of stocks, news site The Paper reported. (Alibaba is the parent company of the Post.)

E-commerce platforms supported efforts to increase spending with generous discounts and coupons, with Alibaba and competitor JD.com both announcing they would be saving consumers up to 2 billion yuan each with promotions on their platforms.

Bricks-and-mortar retailers in Shanghai are also getting a boost from tech companies.

Internet giant Tencent Holdings said it is collaborating with international retailers like H&M and Starbucks to hand out 2 billion yuan in coupons for payments using WeChat Pay, Tencent’s widely used mobile payments platform, while food delivery platforms Meituan Dianping and Ele.me, as well as travel-booking site Ctrip, are offering discounts and coupons for restaurants, shopping malls and hotels in the city.

On the road again

With more people out and about now, Didi Chuxing boss Jean Liu Qing also hinted this week at some positive news for the ride-hailing industry in China: for the first time ever, she said that the Chinese ride-hailing giant’s core business was profitable.

Notably, she did not reveal any specific figures or explain how or when the company had measured its profitability. But our reporter Sarah Dai notes that her comments, in a rare interview with CNBC which aired on Thursday, come at a time when the ride-hailing sector appears to be bouncing back in China.

As the public health crisis eases in China and travel restrictions start to lift, the number of monthly active users on ride-hailing platforms in the country picked up by 17 per cent month-over-month in March, according to data from research firm Analysys.

Didi says ride-hailing business profitable, amid recovery in China market

Top-tier cities such as Shanghai and Beijing showed faster signs of recovery compared with lower-tier cities, with more users opting for private cars instead of public transport, the data also showed.

While global competitor Uber is said to be mulling job cuts of as much as 20 per cent due to a virtual standstill in global transport since the start of the pandemic, which has hit its business hard, Liu said Didi has no plans for job cuts or to raise additional capital.

The company’s ride volume in China has reached 60 to 70 per cent of pre-coronavirus levels and is five times its February low, the president of China’s largest ride-hailing platform added in the interview.

That’s all for this week, but before I go don't forget to check out our podcast discussing why Huawei found itself at the epicentre of the US-China tech war.

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