CHINA

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MARKETWATCH

"China to cut bank reserve requirements"


By MarketWatch

Published: Jan 2, 2020 4:50 a.m. ET

BEIJING--China's central bank said it would reduce the portion of deposits commercial banks are required to set aside as reserves, releasing billions of dollars to the financial system to help boost economic growth.

The People's Bank of China said Wednesday that it would lower its reserve requirement ratio for all banks by 0.5 percentage point, effective Jan. 6, injecting more than 800 billion yuan ($114.9 billion) into the financial system.

The move, which was widely expected, came after Chinese Premier Li Keqiang last month pledged to encourage more bank loans to the nation's cash-strapped small companies.

The official reserve requirement ratio for most large banks will fall to 12.5% from 13% after the cut takes effect, while the ratio for smaller lenders will drop to 10.5% from 11%.

Beijing has in recent months stepped up efforts to boost a weakening economy by pouring more funds into infrastructure, among other measures.

--Liyan Qi, Grace Zhu

https://www.marketwatch.com/story/china ... 2020-01-02
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MARKETWATCH

"China to inject $173 billion into economy to cushion expected stock shock"


By Associated Press

Published: Feb 2, 2020 4:37 p.m. ET

BEIJING — China’s central bank announced plans Sunday to inject 1.2 trillion yuan ($173 billion) into the economy to cushion the shock to financial markets from the outbreak of a new virus when trading resumes on Monday after a prolonged Lunar New Year holiday.

The People’s Bank of China announced several measures over the weekend aimed at stabilizing the economy as the impact of the virus spreads with cancelled flights, stepped up quarantines and other controls.


Beijing extended the usual week-long holiday by three days but markets are due to reopen Monday and many expect they will drop sharply.

Elsewhere in the region, worries over the potential harm to businesses and trade from the outbreak have triggered wide swings in share prices.

On Friday, jitters over the virus caused share prices to plunge.

The central bank statement issued Sunday said the open market operation was aimed at ensuring sufficient liquidity.

In a separate statement Saturday, the PBOC said that while markets would reopen, financial institutions should follow local quarantine regulations and try to minimize gatherings to reduce risks of spreading the virus, which has infected more than 14,000 people and killed more than 300.

That includes allowing rotating shifts, working online from home and other strategies, it said.

Regulators have also urged banks and other financial institutions to boost lending and avoid calling in debts in areas severely affected by the pandemic.

Some cities, particularly the central Chinese city Wuhan where the disease first surfaced, and nearby cities, are still in lockdown.

Shanghai authorities extended the Lunar New Year holiday until Feb. 9.

Universities remain closed for now.

Mainland China’s main share benchmark, the Shanghai Composite index sank 2.8% to 2,976.53 on Jan. 23, its last day of trading before the Lunar New Year.

Chinese authorities have massive resources for intervening to staunch panic selling of shares and have deployed them in past times of crisis.

A large share of the 1.2 trillion yuan to be injected into markets will go to meeting payment obligations falling due on Monday, analysts said.

But it’s still a massive amount of funding.

“This is well beyond the band-aid fix, and if this deluge doesn’t hold risk-off at bay, we are in for a colossal beat down,” Stephen Innes of AxiCorp. said in a client note Sunday.


He noted that any major drop shortly after the markets reopen would be a “catch up.”

“It’s not the earthquake at the open but rather the aftershocks that will drive risk sentiment on Monday,” he said.

https://www.marketwatch.com/story/china ... 2020-02-02
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MARKETWATCH

"Stock market slammed by fears coronavirus will deliver a ‘supply shock’ that central bankers can’t fix"


By William Watts

Published: Feb 26, 2020 3:26 p.m. ET

There’s something different about the threat COVID-19 poses to the global economy.

And that’s what has investors worried.

“Because of its genesis in China, coronavirus is both a demand and a supply shock to the global economy,” said Brian Nick, chief investment strategist at Nuveen, in a Tuesday note.


“Outside of China, however, evidence based on February’s survey data suggests that demand remains solid, and supply issues are the key risk.”

And it’s that threat of a supply shock — an unexpected change in the supply of a product or commodity — that is particularly unnerving for investors.

They are more used to dealing with the occasional threat of negative demand shocks — an unexpected hit to demand for goods and services.

As Erik Nielsen, group chief economist at UniCredit Bank, explained in a Sunday note, investors know that efforts by policy makers to stimulate the economy can partly address demand shocks.

But it is “much more complicated, if at all possible” to offset supply shocks, he wrote, offering the following example:

Think of it this way: China has closed a reported 70,000 movie theatres because of the virus.

That’s a supply shock, and no amount of income (demand) stimulus will boost ticket sales.

Of course, people may increase the number of downloads of films and games to play at home, as we have seen, but this is nothing more than drops in the ocean in terms of the overall economy

Big, negative supply shocks are rare, Nielsen noted, with the oil shocks of the early and late 1970s offering perhaps the most well-known examples.

Other examples of supply shocks include storms, tsunamis, earthquakes, wars, and strikes.

The problem is that there’s little that looser monetary policy or additional fiscal stimulus can do to offset the impact because those stimulus measures work by boosting demand.

Stocks weathered temporary pullbacks earlier this year, with bulls shrugging off warnings about the potential impact of quarantine efforts and shutdowns on Chinese consumer demand and global supply chains.

But the spread of COVID-19 outside of China and the potential for broader disruptions to both activity and demand was blamed in large part for a sharp selloff that saw the S&P 500 log its biggest two-day decline since 2015 on Monday and Tuesday, while the Dow Jones Industrial Average suffered its biggest two-day drop in two years.

A rebound by major indexes in early trade Wednesday had largely evaporated by mid-afternoon, with the S&P 500 and Dow in negative territory.

Stock-market bears have argued that the nature of the potential economic shocks from the viral outbreak, coming at a time when central bank stimulus efforts were seen as already stretched, could threaten the long-running bull market.

While demand has so far held up outside of China, the disruption to global supply chains running through China, Korea and, potentially, Japan is likely to take a toll on production, wrote Nuveen’s Nick.

If Asian production stoppages worsen or continue well into the second quarter, a global supply crunch could hit the already weakening manufacturing sector, he said, with implications for jobs and the wider global economy.

Moreover, it comes in an environment where valuations for U.S. stocks and credit markets were “’priced to perfection’ or something close to it following the three Fed interest rate cuts last year and the resolution of various trade deals,” he said.

Indeed, coming into this week, markets had largely reacted in “a rather casual, and inconsistent, way,” said UniCredit’s Nielsen.

That was due largely to central bank asset purchases and ample liquidity, as well as the unsubstantiated belief the outbreak would be a brief passing issue on the order of the SARS outbreak in the 2000s, he said, along with “apparent confusion about the nature of demand versus supply shocks and the (limited) effectiveness of policy stimulus in these circumstances.”


Nick said that even after Monday’s drop, U.S. stocks still reflect a very positive outlook for earnings growth and the U.S. economy, along with the potential for the November presidential elections to result in “market-friendly status quo”.

“All of that can be thrown into doubt should the global impact of the virus continue to spread,” he said.

“In the near term, look for stocks and other risk assets to respond negatively to signs of deterioration in economic data.”

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MARKETWATCH

"Opinion: Why the Fed can’t defend the economy against the coronavirus outbreak"


By Caroline Baum

Published: Feb 26, 2020 12:15 p.m. ET

Financial markets have stepped up their expectations for interest rate cuts in recent days as fears of a global pandemic finally rocked the heretofore ebullient U.S. stock market.

Federal funds futures are putting the odds of at least one 25-basis-point rate cut by June at 81%, compared with 48% a week ago, according to CME FedWatch tool.


The probability of at least two rate cuts by December has risen to 78%.

(As stocks go down, the probability of a rate cut goes up.)

Short of an accurate assessment of the full scope of the coronavirus — whether or not it becomes a true pandemic — it’s impossible to determine the economic impact or the Fed’s response.

What is possible is to examine the known economic impact from the coronavirus-borne disease, identified as COVID-19, in the context of the Fed’s available tools to address economic weakness.

To date, at least as far as the U.S. is concerned, the main impact of the disease has been on aggregate supply.

The Fed’s interest-rate tool is designed to address aggregate demand.

So the cause and the cure would appear, on the surface, to be incompatible.

The Fed can’t produce parts for automobile manufacturers across the globe that are dependent on intermediate-goods imports from China.

It can’t reopen factories in Hubei Province, the epicenter of the coronavirus outbreak.

It can’t provide needed factory workers for plants in locked-down areas of China.

And it can’t create alternate supply chains as a substitute for China’s role as manufacturer to the world.

The U.S. consumer has been resilient.

It’s Chinese consumers who have curtailed their spending because of quarantines, shuttered stores, restricted travel or fears of going out to public places to shop.

Photos of empty streets convey the devastating impact the virus has already had on China’s economy.

The retrenchment in Chinese spending in turn hurts U.S. producers as the Chinese have become dependable consumers.

China is the largest market for automobiles, for example.

Chinese tourists travel widely and travel well, buying luxury goods from New York to Paris to Tokyo.

So yes, U.S. businesses will be affected.

Many, including Apple, Starbucks and McDonald’s, have closed stores in China.

The travel industry is hurting.

Airlines have canceled flights to and from China and other affected countries, with numbers seeming to increase by the day.

The hospitality industry — hotels, restaurants, etc. — struggles as tourism declines.

Global trade is another casualty.

But lowering U.S. rates won’t stimulate Chinese demand.

The demand-side weakness — reduced U.S. exports to China, exacerbated by a strong dollar and reduced spending in the U.S. by Chinese tourists — is coming from abroad and, as such, will not be responsive to a reduction in U.S. interest rates.


Nor will the decline in U.S. production due to a lack of intermediate inputs and shrinking overseas purchases be reversed by lower rates.

Businesses aren’t going to invest and produce more if fewer people are buying.

That doesn’t mean the Fed won’t cut rates if the U.S. economy shows signs of more than temporary weakness from the effects of the virus.

When an economy is only growing at 2%, it doesn’t take much of an external shock to put it in a precarious position and trigger recession fears.

Goldman Sachs economists raised their projection for the drag on first-quarter gross domestic product from the coronavirus to 0.8 percentage point, lowering their real GDP forecast to 1.2%.

Much of the drag should be recouped as the year progresses, according to Goldman.

A Fed rate cut is not the prescribed antidote for a negative supply shock.

In fact, “the only reason you would cut rates now is if you’re the central bank of the S&P 500,” said Jim Bianco, president of Bianco Research, using a moniker the Fed abhors.


The Fed could choose to lower interest rates to stimulate domestic demand in the hopes of offsetting some of the weakness abroad.

Goosing demand for a limited supply tends to raise prices — which might help the Fed hit its 2% inflation target.

The Centers for Disease Control warned on Tuesday that the coronavirus epidemic would inevitably spread to the United States but did not estimate to what extent.

Should it infiltrate the U.S. to any significant degree, it would cause U.S. consumers to hunker down.

Any significant pullback in the stock market could result in a reverse wealth effect, wherein consumers feel poorer and spend less.

The Fed may be ill-equipped to deal with a global supply shock, but there exists a better reason for the Fed to consider lowering interest rates, now that the yield curve has inverted again.

The yield on the 10-year Treasury note hit an all-time low on Tuesday of 1.31%, pushing it below the yield on both the federal funds rate (1.5%-1.75%) and the 3-month Treasury rate (1.53%).

The yield curve was inverted from May to October of last year before righting itself with the help of the Fed’s three rate cuts.

If the inversion persists, and deepens, especially if the stock market rebounds from its four-day rout, that would be a valid sign that the Fed needs to act, coronavirus or no coronavirus.

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Re: CHINA

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MARKETWATCH

"China purchasing indexes sink to record lows as coronavirus epidemic hits economy"


By Rachel Koning Beals

Published: Feb 29, 2020 11:52 a.m. ET

Official gauges of China’s factory and nonfactory activity plunged to record lows in February as the domestic economy struggled to resume normal production amid the coronavirus epidemic.

The official manufacturing purchasing managers index tumbled to 35.7 in February from 50 in January, indicating a deep contraction.

February’s reading from the National Bureau of Statistics released Saturday was the first official data for a full month of economic activity in China since the coronavirus began affecting the economy in late January.

The 50 mark separates expansion from contraction for this key leading indicator.

The index dropped to 38.8 in November 2008, when the financial crisis gripped the world.

As for the broader view, China’s nonmanufacturing PMI, also released on Saturday, sank to a record low of 29.6 in February from 54.1 in January.

This includes key sectors such as retail, aviation, real estate and construction.


The February result came in far below the median forecast of 43 by economists surveyed by the Wall Street Journal.

The trade war had kept the factory index in contraction for most of 2019 before a late-year rebound.

Notably, economists are waiting for March’s numbers before they have a clean reading of the economic impact without the distortions of the Lunar New Year.

Saturday’s results show a “relatively large impact” from the epidemic, Zhao Qinghe, an analyst with the statistics bureau, said in a statement accompanying the data release, according to the Wall Street Journal.

March’s readings should improve because of authorities’ efforts to help companies, especially manufacturing firms, resume production, he said.

“The situation on the ground [in China] is materially worse than what has come out in the media,” Leland Miller, CEO of the China Beige Book, a research firm that collects Chinese company viewpoints, told MarketWatch in an interview.

“Our flash data shows nearly every major measurement is in contraction,” he said.

“I do always stress that this is early data.”


https://www.marketwatch.com/story/china ... 2020-02-29
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MARKETWATCH

"Opinion: U.S. factories are likely to close because of the coronavirus’ supply-chain shock"


By Daron Gifford

Published: March 16, 2020 at 5:17 p.m. ET

When the Chinese New Year arrived Jan. 25, it offered an unintended benefit: Saving world commerce from the coronavirus, if only temporarily.

In preparation for the largest migration season on the planet, Chinese factories annually build up inventory so plants can shut down while workers return home for the holiday.


But the coronavirus prevented many from reopening and others from returning to full capacity.

The result: That buildup is now near exhaustion.

For the U.S., it presents the very real chance that companies from auto makers to electronics manufacturers will soon begin to cease or limit production.

With a downed China as the headstream of global manufacturing, mercantile America simply can’t function as it’s accustomed to.

We’re starting to see this happen in official reports: The New York Fed’s Empire State business conditions index, released Monday, plunged by a record 34.4 points to minus 21.5 in March.

And Federal Reserve Chairman Jerome Powell said Sunday he expects a contraction in GDP in the second quarter.

Where are parts around us made?

Take the dashboard in your car or the innards of your cell phone.

They’re propelled by semiconductors, resistors and capacitors, which U.S. industry relies heavily on China to produce.

These components are then shuttled to other Chinese factories, where printed circuit boards and sub-assemblies are manufactured, becoming the foundational hardware used to operate everything from Apple iPhones to anti-lock brakes.

Yet with Chinese plants still shuttered or running at half-capacity — and parts stockpiling in ports where ships refuse to stop — Western companies are nearing crisis mode.

Some have resorted to airlifting components.

Others can’t even get their suppliers on the phone.

For automakers including General Motors, Ford or Fiat Chrysler Automobiles, it means that U.S. assembly plants may begin closing later this month.

IHS Markit is now predicting that the coronavirus alone will reduce global car production by nearly a million units this year.

The just-in-time supply chain, exposed

Consider it among the pitfalls of the just-in-time supply chain.

The notion of avoiding the expensive stockpiling and housing of inventory has been a sound practice to streamline costs and operations.

But when it comes to disruptions, like pandemics, natural disasters, or their subsequent fall-out — say, the Fukushima meltdown — its virtues tend to unravel rather quickly.

That’s soon to prove especially true for automakers.

Not a single U.S. plant can operate on American or Mexican parts alone.

While deadly diseases can erupt anywhere, China presents unique threats to the just-in-time philosophy.

Despite its economic might, China’s strength rests with the simple possession of cheap manufacturing cost, not managerial acumen.

In an age of real-time analytics, much of the local production information is still compiled manually, or with limited understanding of its implications beyond the four walls of the plant.

Factories often survive not because they’re profitable in a conventional sense, but due to subsidies from governmental entities yearning to take part in certain industries.

Throw in a top-down tendency toward secrecy, and fragmented communication with the outside world, and U.S. manufacturing relationships can become a nightmare when disaster strikes.

An American automaker may know who’s producing its electronic assemblies and circuit boards, but have little knowledge about second-tier suppliers manufacturing their ingredients.

Some companies have even shipped tooling to a specific plant, only to discover that production is actually taking place at another.

When you work with China, automotive or otherwise, your roster of suppliers never quite carries the full degree of certainty as in the U.S.

This, as we’re soon to see, becomes especially traumatic when disease renders them incapacitated, and the root of your troubles can be traced to a supplier you’ve never heard of.

A reckoning with risk

Though perhaps for reasons more political than practical, politicians have warned for years of our dependence on China, urging U.S. companies to diversify their supply chains.

But it’s easier said than done.

For crisis planning, the U.S. military has traditionally utilized the World War II mindset of running multiple risk-scenario analyses for its combat-supply chains.

Yet it has the advantage of a seemingly near limitless pocketbook in these situations, and an absence of shareholders hawking its quarterly short-term financial performance like a publicly traded or private company.

Even after an immediate crisis steps off the stage, full-fledged reexaminations of how and where they’re supplied tend to languish on to-do lists.

Executives are too busy responding to the new day-to-day problems and neglect to plan for yet more crises in the distant future.

One obvious solution would be altering just-in-time supplies, in order to store inventories in the event of potential production interruptions.

But this could come with significant costs.

So does diversifying suppliers to sources in other countries, or by bringing production in-house.

There’s a reason China remains the headstream of global manufacturing: It’s cheap.

In a world of short-term financial pressures, executives aren’t prone to raising material costs today in the name of some vague, faraway catastrophe.

However, does anyone truly assign an additional risk premium cost for the potential disruption of a global manufacturing and supply operation?

In the meantime, buyers may soon find car selection limited and incentives ceased.

Smartphone prices could rise as stockpiles dwindle, with all manner of goods following suit.

As these types of business disruptions become more frequent, the fallout from disasters like the coronavirus needs to be considered, more than merely a peril we’ll have to live with.

Business leaders need to step up their game, and truly invest in “strategic” manufacturing planning, whether reconsidering decision rules for diversified production operations or closer management attention to their global supply base.

These analytics are not everyday calculations, but the potential upside and downside impacts could be enormous.

Daron Gifford leads Plante Moran’s strategy and automotive industry consulting services.

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MARKETWATCH

"No, China’s economy hasn’t gotten better. The implications could be more serious than investors realize"


By Andrea Riquier

Published: March 24, 2020 at 4:16 p.m. ET

Just how bad is the economic situation in China?

In late February, MarketWatch interviewed Leland Miller, CEO of the China Beige Book, who warned that economic deterioration caused by the novel coronavirus was, as we put it, “worse than you think.”

On Monday, Miller’s firm released a fresh report that confirms that earlier view.


His takeaway now: for investors, the notion of “worse than you think” only tells part of the story.

With more firms reporting in for the final first-quarter tally, Miller said, results are worse, even as parts of the country unwind government restrictions on movement and travel intended to contain the spread of the deadly pathogen.

As CBB’s report puts it, “results continued to deteriorate even into mid-March when most firms were re-opening and supposedly ‘back to work’.”

Miller thinks it is critical that investors understand how bad the downturn in China is so that they can read official reports with some healthy skepticism.

“There’s going to be mixed signals sent to markets,” he said.

“Gloom in Europe and the U.S. but growth in China."

"That will be very alluring."

"But it will be wrong.”

Specifically, Miller expects the Chinese government will report a “March recovery” and then data from then on “will shoot to the moon.”

That will help China appear to have met President Xi Jinping’s growth targets.

But investors need to understand that the Chinese economy hasn’t just fallen off a cliff because it was the epicenter of the blow from the coronavirus, Miller said.

It is also because of the way the virus is now rippling around the world.

“The China recovery story is no longer just about domestic resilience, but also factors beyond Beijing’s control,” the report explained.


“Chinese factories went down just when the world badly needed auto parts supplies,” Miller said in an interview.

Wuhan, China, where COVID-19 was first identified in December, is an auto-manufacturing hub in Hubei province.

“Now those factories are being cranked back online just as demand falls off a cliff."

"You’ll have an oversupply.”

Now, the rest of the world is undergoing the sorts of severe restrictions that China went through weeks ago, Miller noted, and global mitigation efforts from the biological threat are expected to throw much of the globe into recession.

What next?

In the short term, that oversupply could lead not just to destabilized global markets but to more trade tensions.

President Donald Trump’s administration made supply gluts a major pillar of its negotiations with China.


But in the long term, Miller thinks, global interconnectedness will be the biggest victim of the illness derived from the novel strain of coronavirus.

Firms have spent years thinking about rerouting supply chains away from China.

And between the trade war throughout 2019 and the coronavirus now, “this might finally be the point where people say, no mas."

"There are too many implications,” he said, suggesting that countries may adopt more isolationist policies and reroute supply chains.

Some industries may be able to decouple, but some players, like Apple Inc., may find themselves too dependent on China, Miller said.

In fact, if the U.S. and China find themselves locked in a Cold War, there may be political implications for American companies that continue to rely on Chinese supply chains.

The question now may be: “How and to what degree are we going to unravel globalization?” Miller said.

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MARKETWATCH

"China's service activity bounces back in March"


By MarketWatch

Published: March 30, 2020 at 9:42 p.m. ET

BEIJING--An official gauge of business activity beyond Chinese factory floors rebounded sharply in March, as the country's crucial service sector showed signs of recovery from the coronavirus outbreak, though construction activity showed signs of recovery from the coronavirus outbreak.

China's official nonmanufacturing purchasing managers index climbed to 52.3 in March from a record-low reading of 29.6 in February, the National Bureau of Statistics said Tuesday.

March's reading shows expansion, coming in above the 50 level.

The subindex measuring business activity in the service sector jumped to 51.8 from 30.1 in February, while the subindex measuring construction activity was 28.5 in March from 55.1.

The new-orders subindex for the entire nonmanufacturing sector, a measure of demand, increased to 49.2 from 26.5 in February.

A subindex measuring employment rose to 47.7 from 37.9.

The nonmanufacturing PMI covers services such as retail, aviation and software as well as the real-estate and construction sectors.

The data are based on the replies to monthly questionnaires sent to purchasing executives at 4,000 companies in 37 nonmanufacturing sectors.

The official manufacturing PMI, also released Tuesday, climbed to 52 in March from 35.7 in February.

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"Slow Chinese economy casts doubt on speed of U.S. recovery, analysts say"


By Chris Matthews

Published: April 17, 2020 at 9:56 a.m. ET

Investors have taken some solace in signs that China is beginning to dig itself out of the economic hole created by the coronavirus pandemic as restrictions aimed at fighting the disease have been lifted in recent weeks.

Analysts warn though that one should not extrapolate too much from the Chinese experience when predicting how the U.S. economy will rebound, given the varying government responses to the COVID-19 outbreak and significant differences between the U.S. and Chinese economies.


“China has had a less terrible experience than we’ve had,” said Carl Weinberg, chief international economist at High Frequency Economics in an interview.

“The very drastic lockdown in the city of Wuhan and [the surrounding provence of] Hubei appears to have worked.”

Late Thursday China’s National Bureau of Statistics reported that economic growth in the first quarter shrank by 6.8% year-over-year, the sharpest contraction on record, while retail sales for the month of March fell by 15.8% and industrial production fell 1.1%.

While those figures show the economy as hard hit by the virus, there’s also evidence that it is recovering after many restrictions on economic activity were gradually lifted in March.

For instance, the March decline in retail sales was far better than the 20.5% decline seen in the January-February period.

Surveys of the Chinese manufacturing sector also showed it rebounding in March, while data on freight shipments out of Shanghai airport saw air cargo only declining 5% year-over-year.

One reason conditions have been able to improve so quickly after restrictions began to be lifted last month is that much of China’s geography was spared serious outbreaks, Weinberg said.

“I think it’s a bad idea to extrapolate China’s experience and apply it to the U.S., because they contained the virus largely to a specific region,” he added.

“The bottom line is that all major industrial commercial parts of the U.S. are severely impacted by this lockdown.”

Meanwhile, the part of the Chinese economy that appears to be recovering more slowly is consumer spending, as economists polled by the Wall Street journal were expecting an 8% contraction in consumption, versus the nearly 16% contraction that occurred.

If the American consumer mounts a similarly disappointing recovery, it could spell bad news for the U.S. economy, which is much more dependent on consumption than the Chinese.


A survey of Chinese consumers published Thursday showed a slight uptick in willingness to leave the home and shop for discretionary items, but 72% of respondents still reported that they plan to only venture out of the home for necessities, or to not leave home at all over the next seven days.

Furthermore, “sentiment for large ticket items, such as luxury products, electronics and appliances remained sluggish amid continued job market concerns,” wrote Morgan Stanley China analyst Robin Xing.

He added that these data suggest “significantly slower recovery in [consumer] demand” than in the manufacturing sector.

A sluggish consumer is a chief concern for Larry Fink, chairman and CEO of BlackRock, who told CNBC Thursday that “In my conversations with Chinese leadership, they are still very worried about service side of the economy."

"Restaurants are not even close to full, maybe 30% full, even with that testing."

"People are not flying.”

It’s the Chinese example that has him concerned that the U.S. recovery will be a long slog.


“I don’t believe we’ll have a V-shaped recovery,” he said in an interview with CNBC.

“The economy will be slow to really reboot because we are such a heavy service-side economy.”

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MARKETWATCH

"China's economy contracts for first time on record"


By MarketWatch

Published: April 16, 2020 at 10:09 p.m. ET

BEIJING--China's economy contracted for the first time since at least 1992 in the first quarter when the coronavirus pandemic halted factories and kept millions confined to their homes.

Gross domestic product fell 6.8% from a year earlier, compared with 6.0% growth in the fourth quarter of 2019, the National Bureau of Statistics said Friday.

The result was better than the median forecast of an 8.3% contraction in a poll of economists by The Wall Street Journal.

It was the first time the economy had contracted in a quarter since 1992, when the government began to release quarterly figures.

The economy was 9.8% smaller when compared with the fourth quarter of 2019.

The spread of coronavirus and the government's containment measures ground the world's second-largest economy to a near standstill in early 2020.

Other economic data reported Friday, including investment, consumption and industrial production, also suffered falls.

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