China's economic activity rebounds in cities where Covid-19 peaked

While mobility still remains well below pre-pandemic levels, the quick rebound in activity in cities like Beijing - where the outbreak was most severe - suggests the economy could recover faster

Economic activity is rebounding in several Chinese cities where Covid infections likely already peaked, although many parts of the country are still grappling with soaring cases and mobility is still far below levels reached a few months ago.
 

The number of passengers using subways in Beijing, Chongqing, Chengdu and Wuhan rose about 40% to 100% in the week through Wednesday, a sign that residents in those areas are returning to work, shopping and restaurants once again. A measure of traffic congestion in those cities increased about 150% to 240% over the period. 

The mobility figures back up comments from the Chinese Center for Disease Control and Prevention on Thursday that infections have peaked in places like Beijing, Tianjin and Chengdu. The situation remains serious in Shanghai, Chongqing, Anhui, Hubei and Hunan, it said.  

In Shanghai, Shenzhen and Suzhou, subway usage declined between 34% and 42% by Wednesday from a week ago, according to calculations based on a seven-day rolling average of passenger numbers. Road traffic decreased 34% to 57% over the same period. That suggests infections are continuing to spread in those cities, and residents are homebound because of illness or fear of becoming infected. 

While mobility still remains well below pre-pandemic levels, the quick rebound in activity in cities like Beijing — where the outbreak was most severe when China abruptly began dropping Covid restrictions — suggests the economy could post a faster-than-expected recovery once the infection wave passes across the country. 

“December will most likely be the bottom of the economy,” Haitong Securities Co. analysts including Liang Zhonghua wrote in a report Thursday. “The national Covid wave may be peaking already,” which means mobility and economic activity will likely rebound, they said.

Traffic Congestion
 

Activity is still currently lower than it was in October and early November — when Covid outbreaks were mostly under control and fewer places were in lockdown. 

Subway usage in Beijing over the past week, for example, is 41% below what it was at the end of October and is only about half of the level reached a year ago. The number of passengers on Chongqing’s subway was also about 50% lower than at the end of October.

Traffic congestion levels across 15 major cities in China rebounded nearly 60% by Wednesday from a week ago, but still remained 30% below the level in January 2021, according to an index compiled by BloombergNEF based on Baidu Inc. traffic data. 

The improvement was driven by cities including Beijing, Chengdu, Chongqing, Shijiazhuang, Tianjin, Wuhan, Xi’an and Zhengzhou. Others saw congestion levels plunging, including Shanghai, Shenzhen, Ningbo, Dongguan, Qingdao and Suzhou.

Flights Rebound

 

Air travel recovered ahead of the three-day New Year public holiday. The number of daily domestic flights rose 50% by Friday from a week ago, though the volume is still 32% below the level in 2019, according to provisional data from Chinese aviation data company VariFlight.

Aviation activity is likely to rebound further after China announced it will scrap quarantine requirements for inbound travelers, removing the last major Covid curbs ahead of the Lunar New Year holiday in late January. Bookings for outbound flights from mainland China jumped 254% following the announcement, according to Trip.com Group Ltd. data.

Cinema Sales
 

Moviegoers are returning to the cinema as well after Covid testing requirements for entering public venues were relaxed earlier this month and fans flocked to see Walt Disney Co.’s Avatar: The Way of Water, which debuted two weeks ago. The average daily box office revenue remained elevated at more than 56 million yuan ($8 million) in the past four days, according to data from online ticketing platform Maoyan Entertainment.

The number of operating movie theaters in Beijing increased to 219 on Wednesday, up from 155 two weeks ago and only seven at the end of November. The number in Shanghai, however, declined to 250 on Wednesday from 280 two weeks ago, according to Maoyan data.

Hotel Occupancy
 

There’s still little sign of a meaningful rebound in the hospitality industry, suggesting travelers aren’t splurging on hotels. A measure of average hotel occupancy rates across China declined to 48% in the first 24 days of December from 52% in November, according to preliminary data from consultancy STR.

The number of trucks on the roads, which carry the majority of freight in China, rose between 17% and 21% from the beginning of December to Sunday in Beijing, Hebei and Hubei provinces, but declined 8% in Guangdong province, according to a report by Sinolink Securities Co. 

--With assistance from Jinshan Hong, Danny Lee, Fran Wang and Lin Zhu.