A surprising boom in exports, partly fuelled by deliveries of much-needed medical supplies around the world and increased air freight capacity with airlines converting passenger planes to cargo, is giving some confidence back to the bruised Chinese economy.

And whilst there was only a muted return to domestic tourism and travel during the long Labour Day weekend, this did result in a huge amount of people staying home and shopping online, with ecommerce sales surging during the annual 5.5 shopping festival.

More positive news came with the announcement of the re-opening of the Shanghai Disney Resort – the first Disney park to restart operations since the epidemic started, making global news as an indicator of positive recovery for the market.

 

 

Economy and Industry

It is forecast that China’s GDP will bounce back with an estimated growth of 7.9% in 2021. The growth prediction for 2020 has been dramatically reduced to an estimate of 1.2%.

China’s exports in April grew higher than expected and increased by 3.5% YOY, while imports fell by 14.2% in the same period. The export number has been boosted by deliveries of much-needed medical supplies manufactured in China’s now fully-functioning factories. Outbound air freight capacity from Shanghai is reported to be up 6% year on year.

China’s smartphone market saw a significant drop of 22% YOY to 72.6 million in 2020 Q1. Most smartphone brands saw sales dropping significantly, but one brand came out as a winner: Huawei saw their smartphone sales growing by 6% YOY.

Indicators are the private housing market across China is holding relatively steady, and a survey on home buyer confidence indicated a positive index of 102.7 in April, up 1.8% month on month.  So far, prices do not seem to have been severely affected by the pandemic, although the long term impact has yet to be felt across the country. In Shanghai, property sales  jumped 62.3% month on month to April, and the value of a home increased by 5.3%, with luxury housing developments being the main beneficiary.

 

Day to Day Life

Shanghai Disney Resort has announced it will open to the public on May 11thwith a limited number of tickets being available online from May 8th. It will not be possible to purchase tickets on the spot to help manage crowd control.

The policy that exempts new energy vehicles (NEVs) from vehicle purchase tax will be extended to 31st December 2022. The policy was originally set to expire at the end of 2020 according to China’s Ministries of Finance, Industry and Information Technology and State Administration of Taxation

According to AliPay, more than RMB 10 billion worth of vouchers have been issued through the platform by cities and district authorities across China by 5th May, with the objective of stimulating purchasing and consumption. At the same time, WeChat Pay’s data showed that over 190,000 consumers in Wuhan redeemed vouchers issued by the local government. WeChat also facilitated redemption of coupons that led to RMB 900 million in sales, with consumers 40 years old and above contributing to more than half of spending.

The highway companies of China restarted toll charges on 6th Mayending the free of charge service that had been in place for 79 days.

Many schools are slowly returning to normal across China. Some cities, such as Shanghai, are rotating class years by different days and reintroducing teaching gradually.  Wuhan opened up 121 high schools this past week, as the city at the original epicentre of the pandemic starts to return to life as normal.  Across China, schools require regular temperature checks and the wearing of masks at all times.

 

Brands

China’s three main air carriers Air China, China Eastern Airlines and China Southern Airlines have reported a combined USD 1.98 billion loss for 2020 Q1.

China Central Television (CCTV) created an eCommerce livestreaming session with the consumer electronics & appliance store Gome on 1st May. Hosted by four of China’s top male TV hosts (“CCTV Boys”), the session was not only broadcast on CCTV, but also on online video platforms Douyin (TikTok in China), Kuaishou and Bilibili as well on eCommerce platforms Pinduoduo and JD.com. It was a significant success, resulting in 24 million views on Douyin and over RMB 528 million in sales on Pinduoduo and JD.com.  

 

Labour Day Holiday

China’s travel industry did not experience a major recovery over the Labor Day holidayIn total, 115 million tourists traveled during the five-day holiday, representing a 40% drop compared to the same period in 2019. Total revenues were RMB 47.56 billion (60% drop YOY). Visits to public parks in Shanghai during the long weekend were down 48% year on year.

Lifestyle services platform Meituan and social commerce app Pinduoduo rolled out livestreaming and virtual tours to promote traveling during the Labor Day.

During Shanghai’s Double 5 Shopping Festival (on the 5th May), RMB 15.68 billion was spent by consumers online – 1.7 times higher than the same day last year. The  Shanghai-based merchants with the highest gross merchandise volume (GMV) on Tmall were Adidas, Lancome, Yuze, Mercury and Hotwind. Dairy company Guangming sold 30,000 bottles of milk within 10 minutes and Shanghai skin care heritage brand Pechoin sold 60,000 facial treatment masks within one hour.

 

In other news

The People’s Bank of China, China’s central bank, has confirmed the roll out of internal tests for the national digital currency (DECP) in Shenzhen, Suzhou, Xiong’An and Chengdu.

China is expected to account for 44% of the global robotics market this year and will reach a value of USD121 billion by 2024. 

Social commerce platform Pinduoduo has invested USD200 million in home-appliance and consumer electronics retailer Gome.

 

For earlier weekly reports delivered throughout this crisis, click here

Sources: Quest Mobile, Walk the Chat, EV-Volumes, Airbnb, China’s National Bureau of Statistics, Ministry of Transportation, CTrip, People’s Bank of China, Tencent, Huawei, Baidu, Suning, China State Post Bureau, Weibo, Pinduoduo, Kuaishou


Thanks to our PHD China Insights team for their contributions.

Visit our WeChat to view this and more articles and reports. 

We are providing a weekly update on the impact and implications for this current health crisis.

If you have questions or suggestions, please feel free to email us at:

Mark Bowling – CSO PHD China mark.bowling@phdmedia.com or Vladimir Prostran – Group Director Strategic Insights PHD China vladimir.prostran@phdmedia.com