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China has faced a taxing battle against the spread of the COVID-19 virus that affected thousands of outbound and inbound flights to China.

The spread of the virus, mainly in China led to the taking of necessary precautionary measures that have had far-reaching detrimental effects on the economy. Naturally, limited travel to and from China, the delayed opening of many factories, sharp reductions in consumer spending due to self-isolation among others, have had a distortionary effect on economic vitality, felt in China and around the world. Global markets continue to watch steps taken by the central government to counteract the economic impact of this virus.

Key Economic Indicators
The consumer price index (CPI) rose by 5.4 percent year-on-year in January 2020. Food prices grew 20.6 percent year-on-year, contributing to January’s higher inflation compared to the December figure of 4.5 percent Pork prices surged 116 percent year-on-year, as the reduced stock of pork due to African swine fever continues to affect the Middle Kingdom. The producer price index (PPI) saw its first increase since May 2019, however, this was only a 0.1 percent increase year-on-year. This is up from the 0.5 percent decrease in December.

PMI at unchanged level in January
China’s January purchasing manager’s index (PMI) came in at 50.0, 0.2 points lower than December’s reading. While the survey results for January’s PMI came in before the major outbreak of the virus, concerns that a major plunge would occur in February on the back of an extended Chinese New Year holiday break were inevitable. The results will give great insight into the impact the virus will have on the Chinese economy and how quickly it will be able recover later in 2020. While services are expected to be affected more than manufacturing, a decrease across the board may occur.

Mining Indaba in Cape Town
South Africa hosted the annual “Investing in Africa Mining Indaba” at the beginning of February. The event has fallen over Chinese New Year for several years, however 2020 was the first year in which increased Chinese business presence was expected as the two events did not coincide. The Indaba, the Xhosa and Zulu word for discussion or conference, is held annually to promote African mining interests to the global market.

This article is produced is published in The Econometer section of ChinAfrica magazine (March 2020), an English and French language monthly publication that provides news, views and analysis on all things China, Africa and China-Africa relations.

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