City faces long road to full recovery as hurdles remain: expert
Published: Apr 08, 2020 09:03 PM

Aerial photo taken on April 7, 2020 shows a night view in Wuhan, central China's Hubei Province. Wuhan, the megacity in central China, started lifting outbound travel restrictions from Wednesday after almost 11 weeks of lockdown to stem the spread of COVID-19. (Xinhua/Xiao Yijiu)

As the 76-day lockdown in Wuhan, Central China's Hubei Province, was lifted on Wednesday, the city of 11 million people with an economy of 1.6 trillion yuan ($226.44 billion) officially entered the fast lane to a full recovery. 

However, even as the hard-hit city strives to make up the huge amount of economic output lost in the fight against the coronavirus epidemic, there are still serious risks and major hurdles to be overcome. Wuhan remains wary of a potential resurgence of the deadly virus, and disruptions to its supply chain will take long time to fix, analysts said on Wednesday.

On the first day of reopening, many positive signs emerged for the city's economy, as residents went on a spending spree on everything from food to wine to imported cookies. 

Within 10 hours after the lockdown was lifted, e-commerce platform JDDJ saw its sales in the Wuhan metro area surge 240 percent compared with a month earlier and 10-fold compared with two months earlier, a spokesperson for Dada Group, which owns JDDJ, told the Global Times on Wednesday.

Dada, which also provides instant delivery services, reported a 287-percent jump in its delivery orders within the same 10 hours compared with a month ago and the number of workers increased by 273 percent, the spokesperson said.

"With the lockdown lifted, Wuhan is finally back in business, particularly in the area of consumption, which accounts for a large chunk of the city's GDP," Dong Dengxin, director of the Finance and Securities Institute at Wuhan University, told the Global Times on Wednesday, adding that boosting consumption will be key to Wuhan's economic recovery.

However, most of the consumer spending so far has been online, as most residents remain wary of the deadly virus and avoid going to shopping malls and restaurants, said Dong, who lives in the city. 

"There is still a dark cloud hanging over the city and in the minds of its people. It will take some time to regain confidence," he said.

Even as they lifted the lockdown orders after new infections dropped to zero, officials in the city are not taking chances when it comes to preventing a potential resurgence. They continue to enforce strict anti-epidemic measures, leaving some to raise concerns over a persistent strain on economic activities.

But officials have also rolled out measures to boost economic activity, including a plan to issue 2.3 billion yuan in coupons to residents to boost consumption. Officials were also encouraging major industrial firms to resume operations weeks before the lockdown was lifted.

As of Saturday, nearly 94 percent of the 10,897 companies in areas such as industry, construction, retail and services with annual revenue above 20 million yuan had resumed operations, according to official data from Wuhan. Specifically, more than 93 percent of the 2,810 services companies in the city, which contribute 61 percent of Wuhan's output, had resumed operations.

However, even as companies get back to work, they face a difficult time on the market side due to the worsening epidemic in many countries, according to Dong. "For industrial companies, the question now is not about resuming production, but where to find the buyers," he said.

For instance, Wuhan is a major manufacturing hub for vehicle parts, but both the domestic and global supply chains have been seriously disrupted and market demand has been falling, he said. 

"The only way is find markets, both domestically and in some countries that have not been affected."

Chinese officials have taken measures to boost auto consumption, including tax cuts and relaxed restrictions on purchases in some cities. The Chinese auto market remains one of the largest, and even foreign companies are eyeing it.

Valeo, a French global automotive supplier that has a plant in Wuhan, told the Global Times that 80 percent of its production in the city had resumed as of last week, and the majority of output is focused on the Chinese market.

Apart from the auto sector, Wuhan should also step up investment in new growth areas such as 5G, big data and pharmaceuticals to not only offset losses incurred during the lockdown but to nurture further growth areas, analysts said.

"There are definitely a lot of tasks ahead, but at least we are on our way back to normal, both in terms of our lives and our economy," Dong said.