Flowers, Fresh Fish and Movies: China Is Spending Again, Cautiously

By contrast, China’s huge factory sector seems to have weathered the rapid outbreak of Covid in December very well.

Fette Compacting is a leading German manufacturer of machines and equipment for turning pharmaceutical chemicals into tablets. Over just a few days in December, the virus swept through four-fifths of its work force at its factory and offices in Nanjing. But none of the roughly 140 workers fell seriously ill and everyone recovered quickly, said Andreas Risch, the managing director of the company’s China’s operations.

With demand strong for pharmaceuticals, Fette Compacting used overtime to deliver nearly twice as many machines in December as usual, Mr. Risch said. Nearby companies supplying sheet metal and other components for the machines were also able to make deliveries on schedule throughout the outbreak of infections.

But the economic boost for China for that kind of spending is likely to be temporary. And with exports uncertain, local governments low on money for construction projects and the real estate sector struggling, the Chinese economy depends most on sustained spending by the country’s consumers, said Daniel Rosen, a partner at the Rhodium Group, a New York advisory firm.

“Epic household consumption right now is needed,” he said.

Article source: https://www.nytimes.com/2023/02/05/business/china-economy-lunar-new-year.html