THE BRIEF: Useless positive case stats, Consumer confidence, Unemployment, Wages, Business conditions, Restaurant sales, Industrials, Global trade reconfiguring

Trying to make sense of things

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Living with the virus is essentially here. There’s a joke going around that if you don’t see positives on your “WeChat moments” (a feed of friends’ posts) then you have some problems with your social life. The virus is spreading incredibly fast.

The major silver lining is a clear pivot in policy to allow positive cases to home quarantine. We believe fear of centralized quarantine was a major source of anxiety and discontent. Here’s the NHC read out (Chinese) and a Caixin report (English).

Under the new guidelines, asymptomatic and mildly symptomatic patients who meet certain unspecified conditions will generally undergo home quarantine, the State Council task force said in a statement published on the National Health Commission’s website. (Caixin via Sinocism)

The main risk on the horizon is the potential for a surge in deaths or hospitalizations—leading fear, panic, and loss of confidence. To combat fear and panic, there are graphics and short videos laying out what to expect and what to do if you contract covid.

The big questions now are what happens going forward. How much pent-up consumption exists out there? Have consumers and businesses exhausted their savings? Will a US recession further damage export demand? How smooth/bumpy will be China’s exit from zero-covid?

Contents

1. New cases stat not useful

2. Consumer confidence remains subdued

3. The Economic “Pound of Flesh”

4. Signpost: global trade “reconfiguring”

I. New cases no longer useful

There’s much less testing, so this stat is no longer useful. This is likely the last time we use this chart. People are saying: if you want to see how much the virus is spreading, look at your WeChat moments.

II. Consumer Confidence remains subdued

Seven months of depressed consumer confidence shows the economic “pound of flesh” Zero-Covid extracted. How quickly will confidence bounce back?

Meanwhile, youth unemployment remains above the highest levels seen in the first 2 years of zero covid. Overall urban unemployment is at the highest level from 2021.

Private enterprises are important to consumer confidence. They account for 63% of total wages in China as of 2021 (annual data). SOEs account for 36%. The health of private enterprises is paramount to rebuilding consumer confidence.