Summary: SpaceKnow monitors several industries in China from space. For this SNN, we study those industries by province. Our analysis suggests that full lockdowns have an immediate impact on consumer spending. Short lockdown periods cause spending to bounce back soon. Longer lockdown periods have secondary effects with lingering economic weakness. If Chinese authorities soften their stance, most provinces will recover quickly. Until October – November 2022, most provinces were recovering well.
In the analysis below, several industries are used to analyze consumer and business behavior during lockdowns. The most important index monitors Logistics/Distribution centers. The index tracks trucks and containers at distribution centers used to deliver goods to retailers and for e-commerce. This index can be used as a proxy for consumer demand. Another index tracks assembled cars at manufacturing facilities. It serves as a proxy for the production and lockdown behavior of automobile companies. We have also used the Cargo Airports and Coal sectors to supplement information on when lockdowns took place.
Several news outlets have reported protests around zero-tolerance Covid-19 policies in China. The protests have been widespread and led to some recent easing of policies. SpaceKnow’s data suggests that prolonged lockdowns have led to consumer spending weakness and that is potentially the cause of protests. However, once lockdowns are eased, in most cases, evidence suggests that the economy will bounce back quickly.
Shandong: Shandong is the second most populous province in China and ranked third in GDP terms. It is one of the top manufacturing provinces in China. Figure 1 shows that Shandong had three periods of prolonged lockdowns. After the first period ended in 2020, e-commerce spending recovered quickly. After the second lockdown in 2021, consumer spending has remained weak into this year. The blue line, Assembled Cars Index, shows that the business lockdowns were prolonged and deep in 2020/2021. Dips in the line are periods where manufacturing slowed considerably.
Note: The last available data point is 11/28/2022, the data point reflects the 10 day sum, indexed to June 2019. The Logistic Center Index represents the accumulated level of goods movement at distribution centers for 10 days. The Assembled cars Index represents the accumulated level of assembled cars at manufacturing facilities for 10 days.
Guangdong: Guangdong is the largest province by GDP in China. In Figure 2, SpaceKnow Guangdong Logistics Index shows that the impact of Covid lockdowns has been more limited than in Shandong. The blue-shaded areas are periods when Covid cases rose sharply in China (based on government data) and news reports of lockdowns in Guangdong emerged. In Guangdong, lockdowns have been less severe with each incident. SpaceKnow Automotive Index and Cargo Airport data (not displayed here) also suggest that the 2022 lockdowns were less severe than the 2020 period.
Note: The last available data point is 11/28/2022, the data point reflects the 10 day sum of area covered by trucks and containers at most distribution/logistics centers in Guangdong. The blue shaded areas are periods when Covid cases rose sharply in China (based on govt data) and news reports of lockdowns in Guangdong emerged. Units are in square meters on Y-axis.
Hubei: Hubei was the epicenter of the Covid crisis in 2019-2020. It is the 7th largest economy in China. In 2019, Hubei Province, of which Wuhan is the capital, was the fourth-largest car producer in China, with about 10% of the country’s car-making capacity and produced 2.24 million vehicles. In Figure 3, SpaceKnow Hubei Logistics Index shows that the area had largely recovered from the 2020 crisis until about a month ago. The blue-shaded areas are periods when Covid cases rose sharply in China (based on govt data) and news reports of lockdowns in Hubei emerged. SpaceKnow Hubei Assembled Cars Index (not displayed here) shows subdued production until mid-2021, and a sharp rise thereafter.
Note: The last available data point is 11/28/2022, the data point reflects the 10 day sum of area covered by trucks and containers at most distribution/logistics centers in Hubei. The blue shaded areas are periods when Covid cases rose sharply in China (based on govt data) and news reports of lockdowns in Hubei emerged. Units are in square meters on Y-axis.
Yunnan: How have the lockdowns impacted the smaller provinces? Yunnan borders Myanmar and its economy is dependent on trade with the ASEAN region. In spite of news reports around lockdowns in tourist areas, Yunnan has continued to show strong growth, driven by rising trade with its neighbors.
Note: The last available data point is 11/30/2022, the data point reflects the 10 day sum of area covered by trucks and containers at most distribution/logistics centers in Yunnan. Units are in square meters on Y-axis.
Bottom Line:
SpaceKnow Logistics Indices show that the impact of Covid-related lockdowns are generally short-lived and the provinces bounce back strongly once restrictions are lifted. If recent reports are to be believed, our data suggest that most provinces will see a rise in spending.
SpaceKnow’s nowcasting products bring confidence and reduce risk to operations and investments around the world. Interested in learning more about SpaceKnow’s commercial and nowcasting products? Reach out to info@spaceknow.com
Did you enjoy this article? Subscribe using this link, and be the first to receive the next SpaceKnow Nowcasting Newsletter (SNN).
SpaceKnow provides satellite activity data. We research and monitor hundreds of thousands of locations, spanning different industries, to create the world’s most comprehensive activity datasets. Users can now gain a near-real-time, unbiased look at levels of activity for countries, companies, and commodities. Our customers include investors, traders, corporate strategists, economists, and governments.
Disclaimer
This report is provided by SpaceKnow, Inc. (“SpaceKnow”) pursuant to the following terms and conditions:
Industry data and reports published by SpaceKnow (“SpaceKnow Reports”) and made available to paid subscribers and/or other recipients (collectively “Recipients”) are creative works of the mind achieved through algorithmic analysis of publicly available data and the information therein is proprietary to SpaceKnow and protected by copyright. Any copying, distribution or reproduction without the prior permission of SpaceKnow is strictly prohibited.
SpaceKnow Reports are confidential and nothing therein may be disclosed, reproduced, transmitted, distributed, sold, licensed, or altered, in whole or in part, without SpaceKnow’s prior written consent. SpaceKnow reserves the right to release to the public at any time the data and reports provided to Recipients. No rights in SpaceKnow Reports or any of the information contained therein are transferred to Recipients. Any misappropriation or misuse of the information in SpaceKnow Reports will cause serious damage to SpaceKnow and money damages may not constitute sufficient compensation to SpaceKnow; consequently, Recipients agree that in the event of any misappropriation or misuse, SpaceKnow shall have the right to obtain injunctive relief in addition to any other legal or financial remedies to which SpaceKnow may be entitled.
SpaceKnow Reports are based only upon its algorithmic analysis of publicly available data and do not use or rely upon any material non-public information (“MNPI”). The insights included in SpaceKnow Reports do not constitute MNPI or inside information and SpaceKnow is not an insider. SpaceKnow Reports (1) may contain opinions based on third party sources that are not independently verified for accuracy or completeness, (2) may contain forward- looking statements, which are identified by words such as “expects,” “anticipates,” “believes,” or “estimates,” and similar expressions, and (3) are current as of the date of publication but may contain information or statements that are subject to change without notice. SpaceKnow has no obligation to, and will not, update any information contained in SpaceKnow Reports. Actual outcomes could differ materially from those anticipated in SpaceKnow Reports. As a result, the use of SpaceKnow Reports is at Recipients’ own risk.
SpaceKnow and its owners, affiliates and representatives are not (1) investment advisers, commodity trading advisers, broker-dealers, financial analysts, financial planners, or banks, (2) compensated for providing investment advice, (3) registered or licensed with any regulatory body in any jurisdiction as investment advisers, commodity trading advisers, financial planners, broker-dealers, or in any other capacity (including, without limitation, the U.S. Securities & Exchange Commission (the “SEC”), the U.S. Commodity Futures Trading Commission (the “CFTC”), the U.S. Financial Regulatory Authority (“FINRA”), or their equivalents in non- U.S. jurisdictions), and do not recommend the sale or purchase of securities or commodity interests, or (4) licensed or able to provide investment advice or respond to individual requests for recommendations to purchase or sell any securities or commodity interests. No regulatory body in any jurisdiction (including the SEC, CFTC, FINRA, or a regulatory body of any state or any non-U.S. jurisdiction) has endorsed SpaceKnow or the contents of SpaceKnow Reports or the accuracy, adequacy, safety, reliability, usefulness, quality or legitimacy of any information provided to subscribers in SpaceKnowReports. SpaceKnow Reports are not intended to constitute investment advice. SpaceKnow is not an investment adviser within the meaning of Section 202(a)(11) of the U.S. Investment Advisers Act of 1940, as amended, and is not a commodity trading adviser within the meaning of Section 1(a)(12) of the U.S. Commodity Exchange Act. SpaceKnow does not provide investment advisory, portfolio management or financial planning services. The analyses, forecasts, metrics, samples, estimated figures, trends, figures, tables, graphs, projections and other forms of data that may be contained in SpaceKnow Reports do not represent or contain any recommendations to buy or sell any security or any financial products and should not be relied upon as the basis for any transactions in securities.
SpaceKnow Reports are for informational, promotional, educational or evaluation purposes only. Any information contained in SpaceKnow Reports constitutes the opinion or forward-looking statement of individuals and is provided without any representation or warranty of any kind. Neither SpaceKnow nor its directors, officers, employees, agents or representatives shall have any responsibility to you or any third party for the accuracy or completeness of any information provided in any SpaceKnow Report.