MNI EXCLUSIVE: Limited Travel To Aid China Production:Advisors

China's anti-epidemic measures to limit travel during the upcoming Chinese New Year holidays are a boon for manufacturing companies that are inundated with orders and could lift production data, offsetting any weakness in consumption and sectors such as transportation, advisors said.

"In the past, workers took off for as long as a month to celebrate the festival but this year with no travel, they may resume work immediately after the national holiday, said Shen Jianguang, the chief economist with JD Digits and a former visiting scholar at the People's Bank of China.

The week-long holiday begins Feb. 11 this year but the government's stringent requirements for travelers in the wake of small-scale virus outbreaks are expected to deter millions of migrant workers from returning to their homes in far flung areas. Rural authorities have been asked to quarantine travelers for at least 14 days and test them at least twice during their stay.

Production for January and February could be at least 10% to 15% higher than the average in past years, said Wang Jun, an academic committee member at the China Center for International Economic Exchanges.

Moreover, the pandemic has hit northern China more than the southern regions where most of the manufacturing companies are located, so the lockdowns in the north won't have much of an impact on the national economy, Wang added.

FLOOD OF ORDERS

Ming Ming, the chief analyst at state-owned CITIC Securities and a former PBOC official, expects industrial production to grow 6% y/y in February but warned that the transportation and tourism industries could slow.

Several listed companies in the manufacturing sector have said they won't stop production during the holidays as they have too many orders on hand. The virus outbreaks have crimped activity in many manufacturing countries leaving China as the sole supplier for many products. Governments in Jiangsu and Zhejiang have announced awards for companies that discourage workers from traveling and operate during the break.

China's exports will remain strong until the first half but there is some concern about consumption, said Tang Duoduo, Deputy Director of Macro-Economy Research at the Chinese Academy of Social Sciences.

However, the impact on spending won't be major, according to Wang and Shen. "People will spend money wherever they are during the holiday and China's outbreaks are easing," said Wang.