Elsewhere in Beijing, some bars and restaurants have reopened. New restrictions require patrons to sit at tables several feet apart. Ping-pong tables in Beijing’s Ritan Park were busy this week, but many apartment complexes remained under lockdown.
Other data point to a long road back. Subway ridership in major cities is still down by nearly half relative to 2018 and 2019. Property sales remain more than 50% below their average level since 2015, according to Goldman Sachs.
Li-Gang Liu, chief China economist at Citibank, estimated that as many as two million or more people have lost jobs. He is among those who studied the aftereffects of the severe acute respiratory syndrome, or SARS, epidemic in 2003. When the virus was contained, manufacturing rebounded sharply, in a so-called V-shaped recovery. But service industries, including hotels and restaurants took several quarters to fully bounce back.
Back and forth
Chinese authorities are wary of fully lifting restrictions on business activities because they don’t know if Covid-19 will come roaring back, a concern of governments around the world.
Liang Zhenye, who runs a small construction business in the southern province of Guangxi, said his team was still waiting for permits to restart operations. Authorities require they first get certificates showing they have enough masks and other safety gear, which are still in short supply.
Premier Li Keqiang has repeatedly called for less red tape while keeping safety precautions. But local officials fear punishment if new infections appear in their communities.
While waiting to reopen the business, Mr. Liang’s family lives on dwindling savings, he said: “I worry I can’t hang on much longer.”
Jared Haw, president of Cleveland-based contract manufacturer EPower Corp., said he was able to restart his 160,000-square-foot factory near Shenzhen on Feb. 10, one of the first to reopen there. Workers had to sit at least 5 feet apart and only one side of an assembly line could be occupied.
A month later, local inspectors ordered the factory shut for a top-to-bottom review of safety procedures for epidemic control. The inspection took two days. The factory was doused in disinfectant, which kept some assembly lines closed another week.
Adding to the headaches, clients are reluctant to visit in person, engineers remain stuck in Hong Kong, and suppliers are only now just reopening.
One of EPower’s biggest projects is developing and manufacturing an electronic bike for a transportation startup. The client had pushed for assembly to start in May. It has now been pushed to the fourth quarter, Mr. Haw said. About 70% of EPower’s clients are based in the U.S., he said, and some of those projects are also facing delays.
“Of course if there’s a recession,” he said, “that’s going to affect us.”
China’s giant state enterprises, including its state banks, absorb some costs of the recovery and help keep workers employed. State banks, however, are often reluctant to lend to smaller private firms, which drive much of the economy’s innovation and provide the lion’s share of China’s jobs.
While the government can encourage large manufacturers to reopen, getting people to resume their buying habits is tougher.
Growth in consumer credit has stalled. In February, China’s short-term loans to households dropped 450.4 billion yuan ($64.5 billion), the biggest monthly decline since February 2007. Longer-term household loans, including mortgages, added just 37.1 billion yuan, the weakest growth since February 2012, according to data from Wind Co.
The coronavirus epidemic has caused “China’s first credit demand disruption in history,” said Richard Xu, a Morgan Stanley analyst. While the disruption is expected to be temporary, he said, its duration is uncertain and will depend on income growth. Still, China’s overall credit demand could start to rebound in the second quarter assuming the virus is contained, he added.
Zhang Yu, a property-firm employee in the central Chinese city of Zhengzhou, said he stopped taking taxis after he returned to last month work and walks instead.
Vanessa Hu, a 31-year-old brand manager for a condom maker, said she would splurge on several overseas trips a year. She sometimes took out short-term consumer loans offered by Chinese mobile payments giant Alipay to cover costs. Not anymore.
“My generation has never been through a major crisis before and most believed China’s economy will only keep growing,” she said.
She plans to skip all trips abroad this year and canceled her private Thai boxing and yoga classes. “Even when the coronavirus pandemic is over, I have no interest in overspending,” she said. “I want to save like crazy.”
As in any crisis, a lucky few fared well, including Charles Hubbs. He owns Premiere Guard, a manufacturer of protective medical supplies for export in southern China. He said he was losing $500,000 a day during business shutdowns in February.
Six weeks after the company closed its factory doors, he called his son in Houston and told him the firm might have to file for bankruptcy. The Chinese government told him he had to keep paying his workers. And, as a foreigner, he wasn’t eligible for a government bailout.
Local officials then announced factories could restart. By mid-March, Mr. Hubbs’ operation was running above capacity, as raw materials suppliers returned to work and additional staff were hired.
Bankruptcy, he said, is now off the table.