SHIYAN, China (AP) — Sales of Yizhuan Automobile Co.’s garbage trucks picked up after China ended virus checks in December, but growth has slowed as managers struggle to rebuild business lost during the pandemic.
China’s economy rebounded in early 2023, but after a strong first quarter, factory output and consumer spending are weakening. An official survey in April found that a record 1 in 5 young workers in cities were unemployed.
Yizhuan’s sales were up only a single-digit percentage from last year’s depressed level, according to its deputy general manager, Yu Xiongli. The 300-employee company is in Hubei province, where the first cases of coronavirus were detected in late 2019.
“He’s still recovering,” Yu said. “The growth is quite slow.”
China’s economic growth accelerated to 4.5% year on year in the three months to March, from 2.9% in the previous quarter, but forecasters believe the peak of this recovery may already be pass.
Growth is expected to pick up further to meet the ruling Communist Party’s target of “about 5%” for the year.
“So far, the current momentum doesn’t look so promising,” said UBS economist Zhang Ning.
The economy needs a “domestic demand rebound” with government support to bolster business and consumer confidence, Zhang said.
The end of restrictions that sealed off cities for weeks and blocked most international travel has raised hopes of a consumer boom. But retail sales are weak. Buyers are worried about the economic outlook and possible job losses and are reluctant to commit to big purchases.
Retail sales in April jumped 18.4% from last year’s lackluster level, but that was barely half the growth of up to 35% predicted by private sector forecasts. Manufacturing output fell 0.5% from March and investment growth slowed.
“I’m reluctant to spend money,” said Xue Liang, who works in information technology in Beijing. “COVID-19 and changes in the international situation have caused us great concern.”
Manufacturing contracted faster in May, according to a survey by the national statistics agency and an industry group. New orders and export orders fell.
Exports in May fell 7.5% from a year ago after global consumer demand was depressed by interest rate hikes from the Federal Reserve and central banks in Europe and the United States. Asia to calm inflation. Exports to the United States fell 18.2%.
That’s a challenge for automakers and other manufacturers trying to offset weak domestic demand by selling more overseas.
Tenglong Automobile Co., which manufactures electric buses in the southwestern city of Xiangyang, sent salespeople to Russia, South Korea and Southeast Asia as soon as travel controls ended to attempt to revive orders after a three-year hiatus.
“Last year, our overseas customers hardly came,” said Tenglong Deputy General Manager Zhou Shengming. “But this year we have already had several batches. In May, we had three.
Yizhuan in Shiyan, which also sells sanitation, cargo and dump trucks to municipal governments and construction companies, says it exports vehicles worth about $20 million a year to Russia and the ‘South East Asia.
Li Yichun, who runs a bodyguard business in Beijing, said his customers were less willing to spend.
“You can see in my business that the economy is not recovering very well,” Li said. “A lot of clients who are bosses don’t plan to spend on hiring like they used to. “
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AP video producer Wayne Zhang contributed.