Corporate earnings and stock news for April 28, 2022

BEIJING — Lockdowns to stop a growing number of Covid-19 outbreaks have hampered logistics and increased unemployment across China, prompting the country’s leaders this week to order a wide range of measures to prevent the economy from slowing down. any further.

Many companies will be allowed to stop paying unemployment insurance to the government provided they avoid mass layoffs. Electricity and internet charges will be reduced for businesses. Young college graduates will be subsidized to start their own business as few jobs are available.

Truckers will be given many more permits to bypass Covid-19 roadblocks. And migrant workers will receive government benefits if they cannot find employment.

“We must now attach greater importance to stabilizing employment,” Premier Li Keqiang said in a statement released late Wednesday after a cabinet meeting. “The new round of Covid surges has hit employment quite hard.”

Chinese leader Xi Jinping called a separate meeting of senior Communist Party officials on Tuesday to plan accelerated infrastructure investment. These investments have been a mainstay of China’s past efforts to combat economic downturns, but they are sometimes slow to get off the ground and have already burdened many local governments with heavy debts.

Some cities are trying to act more aggressively and quickly to revive the economy. Two very large wealthy ports, Shenzhen and Ningbo, on Thursday began offering their residents a range of shopping and dining gift certificates worth a total of $122 million.

“I think what you see in Ningbo and Shenzhen will be replicated nationally,” said Xu Sitao, chief economist in Deloitte’s Beijing office, adding later, “The best policy is not to build another subway. This is to focus on consumer spending.

The city of Beijing revealed late Thursday afternoon that it had found 56 cases of the coronavirus in the previous 24 hours, up from 46 reported the previous day. The city has mobilized 139,000 medical workers and support staff in a bid to test nearly all of its 22 million residents every other day for five days this week.

Credit…Jade Gao/Agence France-Presse — Getty Images

Beijing also announced on Thursday that its school system would be closed on Friday and students would start the five-day May Day national holiday a day earlier. City officials said they will decide in the coming days whether classes will resume as planned next Thursday after the holidays.

China’s broader economic problems can be seen in the recent struggles of Gao Yang, the general manager of an industrial electrical equipment maker based in Tangshan, a steel hub near Beijing.

The city has been under intermittent lockdown for more than a month. The local government has allowed some companies, including Mr. Gao’s, to resume production if workers eat, sleep and live in the factories without leaving. But his factory still can’t restart because trucks can’t bring raw materials into the city.

“Many parts and accessories from other regions cannot enter,” he said. “So even if we resume work, we are not able to produce.”

Some businesses, notably in the automotive industry, are beginning to reopen, although often at very low production levels. Volkswagen, the market leader in China’s auto industry, last week began gradually reopening its large assembly plant in northeast Jilin province after a five-week shutdown triggered by a long lockdown . This week, Volkswagen began to gradually reopen its even larger factory complex on the outskirts of Shanghai.

Other automakers, including SAIC Motor and Tesla in Shanghai, have also restarted some production. But automakers have refrained from predicting when they might reach full production, let alone when they might start putting in the overtime hours they need to make up the production they lost this spring.

After falling sharply on Monday and a little more on Tuesday, stock prices in China rebounded strongly on Wednesday and rose a little more on Thursday.

China also let the value of its currency, the renminbi, slip steadily throughout the week. This makes Chinese exports even more competitive in foreign markets and could further increase China’s trade surplus.

Ever-growing exports, coupled with weak import demand, have been a crucial driver for China’s economy over the past two years. But they have also fueled rising trade tensions, notably with Europe, which has seen its nearly balanced trade with China turn into a large deficit that has hurt economic growth and jobs there.

Credit…Reuters

Chinese ports have continued to operate during the current shutdowns, and many port workers have been forced since last year to live full-time at the docks for months to avoid infections. But Chinese factories are struggling to find trucks to deliver goods to the docks.

Container freight rates from Chinese ports have actually declined after setting records earlier this year. Ships previously dedicated to transporting goods directly to the United States from China are now making more stops elsewhere in Asia to also pick up goods.

“When ships leave China and arrive in the rest of Asia, there is more capacity,” said Sanjay Bhatia, managing director of Freightwalla, an online freight forwarder based in Mumbai, India.

China’s logistical challenges continue to increase. Air and rail travel are increasingly crippled by shutdowns, with a ripple effect on hotels, restaurants and other service-sector businesses.

The huge Baiyun International Airport in Guangzhou, the hub of southern China, canceled 92% of its flights on Thursday after what the airport described as an abnormal Covid test reading in a single employee.

Baiyun is China’s largest airport by passenger volume and the second largest by cargo, after Pudong International Airport in Shanghai. Beijing, Shanghai and Chengdu all have more air travelers than Guangzhou, but each of these cities divides its air travel between two major airports, while Baiyun handles all of Guangzhou’s aviation.

Rail traffic has also plummeted as cities and provinces discourage visitors from elsewhere in China. Zhou Min, deputy director of the emergency response division at the Ministry of Transportation, told a press conference on Thursday that passenger traffic on trains over the upcoming May Day National Day weekend would be down 62% from last year’s already depressed levels.

Major banks and international institutions have reacted by lowering their forecasts for Chinese economic growth this year in recent days. The International Monetary Fund last week lowered its Chinese growth forecast to 4.4% from 4.8% previously.

The government’s target is still around 5.5%.

Li you contributed to the research.