China to Announce January-February Economic Indicators Reflecting COVID-19 Impact

[Asia Economy Beijing=Special Correspondent Park Sun-mi] Economic indicators for January-February in China, reflecting some of the economic shocks caused by the COVID-19 pandemic, will be announced on the morning of the 16th. The historically low economic indicators are expected to prompt additional stimulus measures from the Chinese government.

On the 16th, the National Bureau of Statistics of China will sequentially release real economy indicators such as industrial production, retail sales, and fixed asset investment for January-February at 10 a.m. (local time). These indicators will fully reveal the impact the Chinese economy has suffered since the outbreak of COVID-19. Considering the Spring Festival (Chinese New Year) holiday in January-February every year, the Chinese government releases some January-February economic indicators all at once in March to prevent statistical distortions.

Economic experts expect the indicators to show historically low levels due to the Chinese government's bold regional lockdowns and suspension of economic activities to curb the spread of COVID-19. In particular, the consumption sector, which plays the largest role in China's GDP growth, is expected to be severely affected. According to the Beijing Economic Operation Association, even large restaurant chains in China have only resumed operations at about 60% capacity.

Liang Hong, Chief Economist at China International Capital Corporation (CICC), China's largest investment bank, predicted that the retail sales growth rate for January-February will plummet to around 2%. Considering that the retail sales growth rate was 8% in December last year, this represents a drop of about 6 percentage points. Economist Liang also forecasted that the industrial production growth rate for January-February will fall significantly to about 3%, down from 6.9% in December last year, and the fixed asset investment growth rate will also decline to around 3.5%, lower than 5.4% in 2019.

Earlier, China announced that exports for January-February plunged 17% year-on-year due to the impact of COVID-19, resulting in a trade deficit of $7.09 billion. Additionally, the consumer price index (CPI) for January-February showed an unusual increase of over 5% due to supply disruptions and rising logistics costs caused by the COVID-19 spread. Manufacturing and non-manufacturing (service) sector indicators for February, released by both the Chinese government and private sectors, all plummeted to 'bottom' levels.

Among experts, there is growing anticipation that as economic indicators reflecting the economic losses from COVID-19 are confirmed one after another, the government’s efforts to normalize the economy will accelerate.

The People's Bank of China will supply liquidity worth 550 billion yuan (approximately 95.6 trillion won) to the market starting today by lowering the reserve requirement ratio of some banks by 0.5 to 1 percentage point. This measure aims to support the real economy, which is struggling due to production stoppages caused by the COVID-19 spread, and to reduce financial costs to facilitate lending.

Sun Guofeng, Director of the Monetary Policy Department at the People's Bank of China, expressed at a press conference yesterday the intention to implement various measures to ease the loan interest burden on companies. He said, "We will comprehensively use various measures to ensure that loan interest rates are definitely lowered," and "we will maintain ample liquidity through various monetary policy tools." Accordingly, the one-year Loan Prime Rate (LPR), which is the de facto 'loan benchmark interest rate' to be announced on the 20th, may also be lowered from the current 4.05%.

The Ministry of Finance of China has also allocated a total of 117 billion yuan to local governments for COVID-19 control measures.

This content was produced with the assistance of AI translation services.