Output from the Chinese manufacturing industry approached a ten-year high last month as it recovered from the ravages of the coronavirus pandemic, according to the benchmark Caixin China General Manufacturing PMI index. The revival was lead by the estimated $69.5bn spent by the 637 million Chinese who took domestic trips during the eight-day Golden Week holiday.
The number of domestic tourists was nevertheless down 21% on 2019 and their spending by 30% year on year. Even then, part of the uptick in Chinese manufacturing was attributable to the travel restrictions that were imposed during the pandemic; many Chinese tourists who would previously have hopped over to Hong Kong and South Korea for duty-free shopping turned instead to the southern Chinese island of Hainan ,spending $78 million) at duty-free shops during the first five days of the holiday alone. This would suggest that at least part of the surge in demand for Chinese goods and tourist services was a one-off.
That may be part of the reason why the region’s principal stock markets failed to respond with any particular enthusiasm to the Chinese manufacturing data. They would also have noted that the second wave of COVID-19 infections that began spreading across Europe last month had dampened demand for new exports. At the close of play on Monday, China’s Shanghai Composite was about flat, while Japan’s Nikkei and Hong Kong’s Hang Seng had risen by 1.3% and 1.4% respectively.
Then of course there is the small matter of today’s US presidential election…….