Moving Past The Pandemic

After years of pandemic-driven disruptions, factory managers and workers are finally seeing the light at the end of the tunnel. The country rapidly removed restrictions of movement in December, a move that greatly increased the number of COVID-19 cases and caused further disruptions.

  • Still, exports were 9.9% lower in December than they were a year earlier, while producer prices dropped by 0.7%. The manufacturing sector experienced its biggest activity decline since the pandemic's start in February 2020, according to a poll
  • Yet, factory managers anticipate that the abrupt U-turn would at last result in a faster recovery than what would have happened through a progressive withdrawal of regulations

Economically, the nation should finally move past a pandemic that for three years stifled local demand and clogged up global supply lines.

Challenging Times

According to Li, an executive at an auto parts manufacturer with factories in Shanghai and the eastern city of Hefei, the government rapidly deconstructed all the COVID-19 measures it had built in order to cause a wave of contaminations and immunisations.

  • When up to 30% of Li's employees fell ill with COVID at the same time last month, his factories had to rush to find temporary fixes
  • The office personnel assisted on the production lines in some cases and many employees with minor symptoms were asked to continue working

More Disruptions Ahead

Manufacturing facilities and local governments are preparing for disruptions over a longer-than-usual holiday season as a result of the 296 million migrant workers in China who are on the move this year. While the Lunar New Year in China lasted from January 21 to January 27 this year, many employees are not expected to return until February 5, the day of the traditional Lantern Festival.

  • Local governments and businesses are now mobilizing to reduce the disruptions
  • To ensure that workers return in early February, they are dispersing money, planning company recruiting visits, and setting up employment fairs

However, social welfare is constrained in China and the government has refrained from providing financial handouts during the pandemic. Workers thus cannot risk going unemployed for an extended period of time. Lower-wage workers have no choice but to hunt for work due to a substantial halt in income growth and relatively high unemployment.

Disclaimer

Please note that this article does not constitute investment advice in any form. This article is not a research report and is not intended to serve as the basis for any investment decision. All investments involve risk and the past performance of a security or financial product does not guarantee future returns. Investors have to conduct their own research before conducting any transaction. There is always the risk of losing parts or all of your money when you invest in securities or other financial products. Please note that the writer of this article is not registered as a financial advisor.

Credits

Photo by shark ovski on Unsplash.