NBS Reveals Q1 Depth of Corona-Virus impact on economy

According figures released by the National Bureau of Statistics, Large Scale Industrial Enterprise Profits decreased by 27.4 percent falling to 1.256 trillion RMB

In the Q1, among the industrial enterprises above designated size, the profits of state-holding Industrial enterprises were around 304.63bn RMB, a decrease of 46.0 percent year-on-year; that of joint-stock enterprises stood at 924.9b  RMB, a fall of 26.6 percentage points; and that of foreign funded enterprises, and enterprises funded from Hong Kong, Macao and Taiwan fell by 28.8 percent to 312.13bn RMB; private enterprises lost 17.2 percent y-o-y to 392.01bn.

At the same time, profits of the mining and quarrying sector decreased by 35.2 percent to 111.01bn RMB billion yuan; manufacturing fell 26.8 percent to 1,026.95bn  RMB; and production and distribution of electricity, heat, gas and water fell 24.3 percent to 121.83bn RMB.

Corona Virus Economic Impact – ADB releases their forecast

The Asian Development Bank has released their predictions for the economic impact of Covid-19. Here’s how the numbers break down.

Comparative economic forecasts

The latest available economic data for the PRC compared to countries in East Asia.

Trade conflict effects

Based on the working paper The Impact of Trade Conflict on Developing Asia, this tool estimates the effects of tariffs on gross domestic product, exports, and employment across Asia and the Pacific countries following the growing trade battle between the United States and People’s Republic of China.

With Factory Deflation Deepening, external demand wavering does China’s first real recession loom?

China’s Producer Price index, that measures the average changes in prices received by domestic producers for their output, fell at its sharpest rate in four years indicating a global slowdown in demand for Chinese goods, according to figures released last week.

That same data showed an unexpected growth in exports in April – perhaps helped by low oil prices – but also showed a stronger than unexpected decline in imports signaling weaker domestic demand.


Producer Prices in China decreased to 96.90 points in April from 98.50 points in March of 2020.

For China this is uncharted territory. It is the first time the NBS has released quarterly negative growth figures since they were first published in the 1990s. The January to March quarter was clearly a supply driven event as China closed down huge sectors of its economy to combat the lethal Coronavirus.

These figures, with the explosion of virus transmission and control measures beyond China’s border, the swelling ranks of unemployed in the US coupled with Washington’s increasingly belligerent stance toward Beijing could be signs of a potentially external demand driven recession could be looming.


China Producer Prices Change

The dire economic impact of the Corona-Virus has prompted the Vice-Premier, Li Keqiang, to to make the unprecedented measure to forgo issuing an annual GDP target.

Some analysts believe the rate at which the PPI are falling will give Beijing room to loosen fiscal measures to stimulate demand. But without the true cost of the epidemic yet known it is difficult to predict how those measures will work. However, with inflation fears diminishing now could be a good time for the BoC to cut borrowing rates.

As Global Pandemic Rages Global Commodity Prices Crash

As countries around the world contend with the health emergency of the COVID-19 pandemic, the economic effects of mitigation measures have immediately impacted the world’s commodity markets and are likely to continue to affect them in the longer term. 

The global economic shock of the pandemic has driven most commodity prices down and is expected to result in substantially lower prices over 2020, the April Commodity Markets Outlook reports. Here is a look at the outlook for commodity markets in six charts.

As countries around the world contend with the health emergency of the COVID-19 pandemic, the economic effects of mitigation measures have immediately impacted the world’s commodity markets and are likely to continue to affect them in the longer term. 

The global economic shock of the pandemic has driven most commodity prices down and is expected to result in substantially lower prices over 2020, the April Commodity Markets Outlook reports.

Here is a look at the outlook for commodity markets in six charts:

1. The pandemic has led to widespread commodity price declines

Mitigation measures taken to slow the spread of COVID-19 have resulted in an unprecedented collapse in economic activity and transport, resulting in widespread declines in commodity prices.  Most commodity prices are forecast to be lower in 2020 than 2019, with energy the most affected, and agriculture the least. The risks to the price forecasts are large in both directions and depend heavily on the speed at which the pandemic is contained and mitigation measures are lifted.


2. The crude oil market has been affected most by the pandemic

The outbreak of COVID-19 has had the largest impact on the crude oil market, as two-thirds of oil is used for transport.  Crude oil prices are forecast to average $35/bbl in 2020, reflecting an unprecedented collapse in oil demand. Brent crude oil prices have declined 70 percent from their January peak, and a historically large production cut by the Organization of the Petroleum Exporting Countries and other oil producers failed to lift prices in April. All crude oil benchmarks have seen sharp falls, with some briefly dropping to negative levels. Crude oil demand is expected to decline almost 10 percent (y/y) in 2020, more than twice as much as any previous fall.


3. Metals have fallen as industrial demand has collapsed

Most metal prices declined in the first quarter of 2020, reflecting a collapse in global industrial demand due to the COVID-19 pandemic. 

Stimulus measures and rising supply concerns have had a limited impact so far in supporting metal prices. The declines in metals prices resulting from the COVID-19 pandemic are—for now—less severe compared to the global financial crisis.


4. Prices for food commodities except rice fell

Most food commodity prices declined in response to mitigation measures to contain the spread of the COVID-19 pandemic, record production for some grains, and favorable weather conditions in key producing regions.  Rice prices, however, increased due to announcements of policy restrictions by some East Asian producers and weather-related production shortfalls.


5. Despite well-supplied markets, food security is a concern

Global food markets remain well supplied due to bumper harvests, especially in maize and wheat and major staple food commodities, stock-to-use ratios are very high by historical standards.

Nevertheless, hints of hoarding by some key exporters, and excess buying by some importers have raised concerns about food security

If concerns of shortages become widespread, hoarding may result leaving low-income countries vulnerable to food insecurity, as food accounts for a much larger proportion of their consumption than in more developed economies.

3bn RMB in Consumption vouchers?

In an effort to re-float the economy after the draconian – but effective – shutdown that all but rid China of the Covid-19 scourge, many local administrations have begun issuing digital consumption vouchers similar to Groupon style activities through the nations’s mobile payment platforms to boost the coronavirus-hit economy, but some experts seem skeptical.

Consumption vouchers, some of which are digital and accessible through platforms including Ant Financial Services Group’s Alipay and Tencent Holdings Ltd.’s WeChat Pay, have been distributed across 28 provincial-level regions and over 170 prefecture-level cities, according to Wang Bingnan, a deputy head of the Ministry of Commerce last week.

Wang said that the value of the already distributed vouchers, which can mainly be used for retail and catering spending, amounted to over 19 billion yuan ($2.7 billion). A sharp contrast to the trickle down stimulation efforts by western governments.