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China’s Factories Are Back. Its Consumers Aren’t. China’s Factories Are Back. Its Consumers Aren’t.
(10 days later)
BEIJING — An unemployed young college graduate has stopped buying new sneakers. A clothing store clerk gave up his gym membership. An events planner, his pay cut by four-fifths, now moonlights as a takeout delivery driver — and can no longer afford to eat out.BEIJING — An unemployed young college graduate has stopped buying new sneakers. A clothing store clerk gave up his gym membership. An events planner, his pay cut by four-fifths, now moonlights as a takeout delivery driver — and can no longer afford to eat out.
China, the world’s second-largest economy and a key driver of the global growth engine, has a big problem with its spenders. Until it can be solved, the country’s growth — and, by extension, the world’s — will be difficult to rekindle.China, the world’s second-largest economy and a key driver of the global growth engine, has a big problem with its spenders. Until it can be solved, the country’s growth — and, by extension, the world’s — will be difficult to rekindle.
As the coronavirus outbreak ebbs in China, the country’s companies and officials have made big strides in restarting its economy. Its factories, brought to a standstill when the coronavirus outbreak swept through the country in January, are humming again, and even the air pollution is coming back.As the coronavirus outbreak ebbs in China, the country’s companies and officials have made big strides in restarting its economy. Its factories, brought to a standstill when the coronavirus outbreak swept through the country in January, are humming again, and even the air pollution is coming back.
Empowering consumers could be the tougher task. Many lost their jobs or had their pay slashed. Still others were shaken by weeks of idleness and home confinement, a time when many had to depend on their savings to eat. For a generation of young Chinese people known for their American-style shopping sprees, saving and thrift hold a sudden new appeal.Empowering consumers could be the tougher task. Many lost their jobs or had their pay slashed. Still others were shaken by weeks of idleness and home confinement, a time when many had to depend on their savings to eat. For a generation of young Chinese people known for their American-style shopping sprees, saving and thrift hold a sudden new appeal.
Chloe Cao, a Beijing translator of French stage dramas, once spent over $200 a month in restaurants, $70 a month in coffee shops and as much as $170 for a tube of imported face cream. Now unemployed, she cooks for herself, brews her own coffee and buys $28 Chinese face cream.Chloe Cao, a Beijing translator of French stage dramas, once spent over $200 a month in restaurants, $70 a month in coffee shops and as much as $170 for a tube of imported face cream. Now unemployed, she cooks for herself, brews her own coffee and buys $28 Chinese face cream.
“My spending power has suffered a cliff-like drop,” said Ms. Cao. “When I find a job, I will start saving money, and I can’t live a wasteful life like before.”“My spending power has suffered a cliff-like drop,” said Ms. Cao. “When I find a job, I will start saving money, and I can’t live a wasteful life like before.”
China’s consumer confidence problem offers potential lessons for the United States and Europe, which are only beginning to plan their recoveries. Even if companies reopen, the real challenge may lie in enabling or persuading stricken and traumatized consumers to start spending money again.China’s consumer confidence problem offers potential lessons for the United States and Europe, which are only beginning to plan their recoveries. Even if companies reopen, the real challenge may lie in enabling or persuading stricken and traumatized consumers to start spending money again.
By some measures, China’s economy is getting back on track. By the end of February, most of its factories and mines had reopened, according to a variety of data, cranking out everything from steel to cellphones at a blistering pace through March. Industrial output rebounded to a near-record level.By some measures, China’s economy is getting back on track. By the end of February, most of its factories and mines had reopened, according to a variety of data, cranking out everything from steel to cellphones at a blistering pace through March. Industrial output rebounded to a near-record level.
Others measures suggest the Chinese economy is still limping. Retail sales, which stayed strong during past crises, plummeted almost one-sixth in March from a year earlier.Others measures suggest the Chinese economy is still limping. Retail sales, which stayed strong during past crises, plummeted almost one-sixth in March from a year earlier.
Satellite imagery shows that Chinese industrial areas emitted considerably less light this spring than they did a year ago, in a sign that fewer building sites may be floodlit for 24-hour construction and that fewer factories may be operating around the clock.Satellite imagery shows that Chinese industrial areas emitted considerably less light this spring than they did a year ago, in a sign that fewer building sites may be floodlit for 24-hour construction and that fewer factories may be operating around the clock.
Even the factory work that has resumed may not be dependable for long. Customers in the United States and Europe also are not buying Chinese-made goods like they once did. Department stores in the United States, for example, have been canceling and postponing orders.Even the factory work that has resumed may not be dependable for long. Customers in the United States and Europe also are not buying Chinese-made goods like they once did. Department stores in the United States, for example, have been canceling and postponing orders.
China’s unemployment statistics — which showed a 5.9 percent urban unemployment rate in March — are notoriously unreliable. Larry Hu, an economist at Macquarie Securities, an Australian investment bank, estimates that China’s urban unemployment rate will nearly double this year. True unemployment may be as high as 20 percent if migrant workers from rural areas are included, according to one estimate from Zhongtai Securities, a Chinese brokerage.China’s unemployment statistics — which showed a 5.9 percent urban unemployment rate in March — are notoriously unreliable. Larry Hu, an economist at Macquarie Securities, an Australian investment bank, estimates that China’s urban unemployment rate will nearly double this year. True unemployment may be as high as 20 percent if migrant workers from rural areas are included, according to one estimate from Zhongtai Securities, a Chinese brokerage.
Overall sales of furniture, clothing, household appliances and jewelry each plunged by a quarter to a third in March compared a year earlier. On the street and in malls, many stores have plenty of clerks and some window shoppers but few actual buyers.Overall sales of furniture, clothing, household appliances and jewelry each plunged by a quarter to a third in March compared a year earlier. On the street and in malls, many stores have plenty of clerks and some window shoppers but few actual buyers.
Liang Tonghui, a 40-year-old from central China’s Henan province, stood recently at a nearly deserted fruit stand in Beijing, trying to sell peaches and apples. Almost all the other migrants he knows are struggling to find work. He sells apples for 40 percent off at the end of each day because he cannot find full-price buyers.Liang Tonghui, a 40-year-old from central China’s Henan province, stood recently at a nearly deserted fruit stand in Beijing, trying to sell peaches and apples. Almost all the other migrants he knows are struggling to find work. He sells apples for 40 percent off at the end of each day because he cannot find full-price buyers.
“If half the people are not coming to work,” Mr. Liang said, “what do you think is the number of people coming here?”“If half the people are not coming to work,” Mr. Liang said, “what do you think is the number of people coming here?”
China needs to kick-start consumption because the old ways to juice its economy don’t work like they once did. After running up huge debts to pay for new high-speed rail lines, highways and other infrastructure following the global financial crisis, China tried to depend more on its consumers. In an economy that registered nearly a half-century of continuous growth without recording a single recession, young people in particular became willing to borrow and spend almost like Americans.China needs to kick-start consumption because the old ways to juice its economy don’t work like they once did. After running up huge debts to pay for new high-speed rail lines, highways and other infrastructure following the global financial crisis, China tried to depend more on its consumers. In an economy that registered nearly a half-century of continuous growth without recording a single recession, young people in particular became willing to borrow and spend almost like Americans.
A number of economists have called on China to do more to help consumers. While the United States and other countries have unleashed major spending programs that include direct payments to households, China has largely refrained so far, in part because of debt concerns.A number of economists have called on China to do more to help consumers. While the United States and other countries have unleashed major spending programs that include direct payments to households, China has largely refrained so far, in part because of debt concerns.
Without shoppers, the retail industry — one of the largest employers in China — will continue to suffer.Without shoppers, the retail industry — one of the largest employers in China — will continue to suffer.
Peng Fei lost his part-time job at a clothing store in south-central China that closed during the pandemic. He has responded by halting trips to the gym and cut back on going drinking with friends. He has shelved plans to move out of his parents’ home.Peng Fei lost his part-time job at a clothing store in south-central China that closed during the pandemic. He has responded by halting trips to the gym and cut back on going drinking with friends. He has shelved plans to move out of his parents’ home.
“Before, I’d spend as much as I had,” he said.“Before, I’d spend as much as I had,” he said.
The shock of the virus and accompanying lockdowns have also prompted many to review their spending priorities.The shock of the virus and accompanying lockdowns have also prompted many to review their spending priorities.
Updated July 7, 2020
The coronavirus can stay aloft for hours in tiny droplets in stagnant air, infecting people as they inhale, mounting scientific evidence suggests. This risk is highest in crowded indoor spaces with poor ventilation, and may help explain super-spreading events reported in meatpacking plants, churches and restaurants. It’s unclear how often the virus is spread via these tiny droplets, or aerosols, compared with larger droplets that are expelled when a sick person coughs or sneezes, or transmitted through contact with contaminated surfaces, said Linsey Marr, an aerosol expert at Virginia Tech. Aerosols are released even when a person without symptoms exhales, talks or sings, according to Dr. Marr and more than 200 other experts, who have outlined the evidence in an open letter to the World Health Organization.
Common symptoms include fever, a dry cough, fatigue and difficulty breathing or shortness of breath. Some of these symptoms overlap with those of the flu, making detection difficult, but runny noses and stuffy sinuses are less common. The C.D.C. has also added chills, muscle pain, sore throat, headache and a new loss of the sense of taste or smell as symptoms to look out for. Most people fall ill five to seven days after exposure, but symptoms may appear in as few as two days or as many as 14 days.
Scientists around the country have tried to identify everyday materials that do a good job of filtering microscopic particles. In recent tests, HEPA furnace filters scored high, as did vacuum cleaner bags, fabric similar to flannel pajamas and those of 600-count pillowcases. Other materials tested included layered coffee filters and scarves and bandannas. These scored lower, but still captured a small percentage of particles.
A commentary published this month on the website of the British Journal of Sports Medicine points out that covering your face during exercise “comes with issues of potential breathing restriction and discomfort” and requires “balancing benefits versus possible adverse events.” Masks do alter exercise, says Cedric X. Bryant, the president and chief science officer of the American Council on Exercise, a nonprofit organization that funds exercise research and certifies fitness professionals. “In my personal experience,” he says, “heart rates are higher at the same relative intensity when you wear a mask.” Some people also could experience lightheadedness during familiar workouts while masked, says Len Kravitz, a professor of exercise science at the University of New Mexico.
The steroid, dexamethasone, is the first treatment shown to reduce mortality in severely ill patients, according to scientists in Britain. The drug appears to reduce inflammation caused by the immune system, protecting the tissues. In the study, dexamethasone reduced deaths of patients on ventilators by one-third, and deaths of patients on oxygen by one-fifth.
The coronavirus emergency relief package gives many American workers paid leave if they need to take time off because of the virus. It gives qualified workers two weeks of paid sick leave if they are ill, quarantined or seeking diagnosis or preventive care for coronavirus, or if they are caring for sick family members. It gives 12 weeks of paid leave to people caring for children whose schools are closed or whose child care provider is unavailable because of the coronavirus. It is the first time the United States has had widespread federally mandated paid leave, and includes people who don’t typically get such benefits, like part-time and gig economy workers. But the measure excludes at least half of private-sector workers, including those at the country’s largest employers, and gives small employers significant leeway to deny leave.
So far, the evidence seems to show it does. A widely cited paper published in April suggests that people are most infectious about two days before the onset of coronavirus symptoms and estimated that 44 percent of new infections were a result of transmission from people who were not yet showing symptoms. Recently, a top expert at the World Health Organization stated that transmission of the coronavirus by people who did not have symptoms was “very rare,” but she later walked back that statement.
Touching contaminated objects and then infecting ourselves with the germs is not typically how the virus spreads. But it can happen. A number of studies of flu, rhinovirus, coronavirus and other microbes have shown that respiratory illnesses, including the new coronavirus, can spread by touching contaminated surfaces, particularly in places like day care centers, offices and hospitals. But a long chain of events has to happen for the disease to spread that way. The best way to protect yourself from coronavirus — whether it’s surface transmission or close human contact — is still social distancing, washing your hands, not touching your face and wearing masks.
A study by European scientists is the first to document a strong statistical link between genetic variations and Covid-19, the illness caused by the coronavirus. Having Type A blood was linked to a 50 percent increase in the likelihood that a patient would need to get oxygen or to go on a ventilator, according to the new study.
If air travel is unavoidable, there are some steps you can take to protect yourself. Most important: Wash your hands often, and stop touching your face. If possible, choose a window seat. A study from Emory University found that during flu season, the safest place to sit on a plane is by a window, as people sitting in window seats had less contact with potentially sick people. Disinfect hard surfaces. When you get to your seat and your hands are clean, use disinfecting wipes to clean the hard surfaces at your seat like the head and arm rest, the seatbelt buckle, the remote, screen, seat back pocket and the tray table. If the seat is hard and nonporous or leather or pleather, you can wipe that down, too. (Using wipes on upholstered seats could lead to a wet seat and spreading of germs rather than killing them.)
If you’ve been exposed to the coronavirus or think you have, and have a fever or symptoms like a cough or difficulty breathing, call a doctor. They should give you advice on whether you should be tested, how to get tested, and how to seek medical treatment without potentially infecting or exposing others.
Harry Guo, a 22-year-old Shanghai bartender, said that he used to spend any extra money he had on vacations to other cities in China, but had been stunned by how many people had trouble affording even groceries during the pandemic. Now he does not worry about keeping up appearances when he goes out, seldom buying new sneakers or other indulgences.Harry Guo, a 22-year-old Shanghai bartender, said that he used to spend any extra money he had on vacations to other cities in China, but had been stunned by how many people had trouble affording even groceries during the pandemic. Now he does not worry about keeping up appearances when he goes out, seldom buying new sneakers or other indulgences.
“As long as the money is in your wallet, there is a strong sense of security,” Mr. Guo said. “It just has to lie there, you don’t have to spend it, you feel comfortable just opening the wallet and seeing it.”“As long as the money is in your wallet, there is a strong sense of security,” Mr. Guo said. “It just has to lie there, you don’t have to spend it, you feel comfortable just opening the wallet and seeing it.”
To qualify for extra loans from banks or rent waivers from landlords, businesses have typically been required to avoid layoffs. Many companies reduced hours and pay instead.To qualify for extra loans from banks or rent waivers from landlords, businesses have typically been required to avoid layoffs. Many companies reduced hours and pay instead.
Chen Ke works for a Shanghai sports events planner and saw his pay drop by four-fifths last month as events were canceled. He has started working part time as a food delivery driver and has given up restaurant meals in favor of instant noodles and pasta at home. He now makes coffee from instant powder instead of buying freshly brewed cups at his local convenience store.Chen Ke works for a Shanghai sports events planner and saw his pay drop by four-fifths last month as events were canceled. He has started working part time as a food delivery driver and has given up restaurant meals in favor of instant noodles and pasta at home. He now makes coffee from instant powder instead of buying freshly brewed cups at his local convenience store.
“The salary used to be put into your bank account every day, it was just a number,” Mr. Chen said. But delivering food for less than a dollar per trip, “I really understand how hard it is to make money.”“The salary used to be put into your bank account every day, it was just a number,” Mr. Chen said. But delivering food for less than a dollar per trip, “I really understand how hard it is to make money.”
The risk for China is that its consumers grow too cautious in their spending. The country has spent years enlarging its social safety net to extend health care and other services to more people so that they will spend their money instead of saving it for an emergency.The risk for China is that its consumers grow too cautious in their spending. The country has spent years enlarging its social safety net to extend health care and other services to more people so that they will spend their money instead of saving it for an emergency.
As a 29-year-old who could always find work, Ms. Cao, the Beijing translator, never worried about where her next paycheck might come from. She accumulated a closet full of expensive handbags.As a 29-year-old who could always find work, Ms. Cao, the Beijing translator, never worried about where her next paycheck might come from. She accumulated a closet full of expensive handbags.
Amid the epidemic, one day she pulled out all of her handbags, spread them on her bed and examined them with dissatisfaction. “I spent so much money to buy handbags,” she said to herself. “How can these handbags help me now?”Amid the epidemic, one day she pulled out all of her handbags, spread them on her bed and examined them with dissatisfaction. “I spent so much money to buy handbags,” she said to herself. “How can these handbags help me now?”
It is still not clear whether the new consumer frugality in China will last beyond the broad availability of a vaccine and the resumption of normal life. But for now, many are saying that their attitudes have changed for good.It is still not clear whether the new consumer frugality in China will last beyond the broad availability of a vaccine and the resumption of normal life. But for now, many are saying that their attitudes have changed for good.
“What if I get a serious illness in the future, what if I lost my job again in the future?” Ms. Cao said. “I think that in the future, I must have a certain amount of money in my bank account to make me feel secure.”“What if I get a serious illness in the future, what if I lost my job again in the future?” Ms. Cao said. “I think that in the future, I must have a certain amount of money in my bank account to make me feel secure.”
Coral Yang, Liu Yi, Albee Zhang and Wang Yiwei contributed research.Coral Yang, Liu Yi, Albee Zhang and Wang Yiwei contributed research.