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Coronavirus

China counts economic losses as dust begins to settle on outbreak

Consumer spending plummets, but signs of recovery as Uniqlo reopens stores

China's National Health Commission said Thursday the peak of the domestic COVID-19 outbreak was over.   © Reuters

BEIJING -- The novel coronavirus outbreak has exacted a heavy toll on consumer spending in China, with smartphone and auto sales falling precipitously and travel and other leisure activities coming to a standstill.

China's National Health Commission said Thursday that the peak of the domestic COVID-19 outbreak was over, and some retailers and restaurants have resumed business. But containment efforts, including the extension of the Lunar New Year holiday and restrictions on people's movement, came with a great economic cost.

Sales of passenger vehicles, which account for 70% of the world's largest automobile market, plunged 81.7% in February from a year earlier to 220,000 units. 

New energy vehicles, the catchall term for electric vehicles and hybrids, also suffered heavily last month. Sales plunged 75.2%, with demand from ride-share dropping off sharply.

China also boasts the world's largest smartphone market, where deliveries shrank 55% to 6.34 million units in February, according to the state-backed China Academy of Information and Communications Technology. Diminished factory utilization has tightened supplies of new handset models, and the mass closures of phone stores left a mark as well.

Unit sales of consumer appliances, such as air conditioners, refrigerators and washing machines, contracted by 16% to 19% on the year for the period between Jan. 1 and Feb. 18, according to media reports.

"Except for air purifiers and utensil disinfecting devices, sales declines have been brutal in general," said a clerk at an appliance store.

The strict restrictions the government imposed on movement dealt a crippling blow to the travel industry. More than 100 million people cancelled bookings, leading to an estimated loss of 550 million yuan ($79 billion) during the Lunar New Year holiday.

Baicheng, a mid-tier online travel booker backed by Chinese e-commerce giant Alibaba Group Holding, has declared bankruptcy. 

China's film industry, now the second largest behind the U.S., is grappling with the postponement of several movie openings. This year's box office receipts are poised to decline by nearly 10 billion yuan.

In the dining industry, 95% of them said revenues since Lunar New Year have been down 70%.

But there are signs of recovery. Retail stores and restaurants are restarting business in Shanghai and other large cities.

Several outlets limit the number of people entering as a measure to curb the spread of the disease. At the same time, "the economy is gradually returning to normal," said an executive at a major restaurant chain. "I hope this trend speeds up further."

Multinationals doing business in China are normalizing operations in response to commercial buildings reopening and public transportation providers resuming services.

Uniqlo, the casualwear chain run by Fast Retailing, temporarily shut down about 370 outlets, or about half of the Chinese locations on Feb. 7. Now the number hovers around 40 as of Thursday, with most located in Wuhan, the epicenter of the coronavirus pandemic.

As of Wednesday, only 17 Muji retail stores remained closed. At one point, Feb. 9, operator Ryohin Keikaku shut down 151 out of its roughly 260 Muji outlets.

Leading gyudon beef bowl purveyor Zensho Holdings closed more than 100 out of the roughly 400 Sukiya-branded restaurants in China. Now the closures are reportedly down to a few dozen eateries.

Aeon has reopened tenant stores at all but four Aeon Malls in China, with three of the holdout malls located in Wuhan. In mid-February, tenants suspended operations at 11 Aeon Malls, or about half the shopping center chain.

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