Question: is China back to normal now?

Shanghai, April 24th 2020


We get asked more and more often: “is China back to normal now?” a simple question, yet the answer is complex and requires proper assumptions.

In order to provide a proper answer, our hypothesis rests on two dimensions: first of all, China is not a monolithically entity, it’s a continent-sized country with a multitude of climates, dialects, development levels. Second, normality is not a matter of black versus white, but rather a scale of greys.

In order to test our hypothesis, we analyzed traffic data. Rising levels of traffic (both in private and public transit) are showing a gradual but uneven activity pickup after the economic slowdown caused by China’s fight to contain the COVID-19. The traffic data offers important clues to the health of the world’s second-largest economy and can be interpreted as a leading indicator of the confidence of Chinese consumers going forward.

Shanghai subway traffic data shows a steady growth in its weekday figures. Average daily figures for April amount to 7.7 million rides / day, up 48% from the March average of 5.2 million. Yet, this figure is 36% lower than the average weekday daily traffic in 2019 which reached 11.9 million rides / day, indicating that while the regular morning and evening commutes are back to normal, plenty of movements that usually occur during the day (e.g. afternoon movements of workers, such as people going to meet with a client) are limited, or missing (e.g. student commutes).

The weekend data is also insightful, as it is much more depressed than its weekday counterpart. April’s weekend daily average amounted to 3.6, down 54% from its counterpart in 2019. The conclusion is all but straightforward: Chinese people might be back to normal for what concerns their basic work needs, but many still refrain from moving around during their free time. Some cities are drafting new laws to allow for a 2.5 days weekend, with the idea that this will stimulate local economies such as tourism, entertainment and restaurants. However, the data likely shows that people currently do not lack free time, but lack peace of mind. Until their confidence is restored and they will feel safe, weekend movements will be suppressed, no matter the length of the weekend.

This is confirmed too by looking at car traffic; analyzing TomTom’s traffic data, we can get confirmation of such workday-weekday gap, and also get some insights in terms of regional differences.

By looking at the data, it is clear that:

  • In Wuhan, the situation is not yet back to normal. Workday commute traffic is about two-thirds of what it used to be in 2019, and in the rest of the week it is basically non-existent. This is consistent with the current restriction still imposed: while officially Wuhan is no longer under lockdown, people are still advised to move around only for work-related reasons.
  • The situation in Tier 1 cities shows greater caution than in Tier 2 cities. Shanghai, Beijing, Guangzhou, Shenzhen all show suppressed traffic during weekends and somehow low traffic during non-peak hours of workdays. Given the high visibility of these cities on the global stage, their respective local governments are on high alert to prevent the resurgence of the virus, so the message towards the population has not been relaxed yet. Moreover, these cities have enjoyed for many years robust economy, and the implication is that they do not need to rush back into growth mode. Last but not least, with the recent focus on imported cases, it is likely that the high alert is compounded by the fact that these four cities have the highest concentration of foreigners and connections between China and the outside world.
  • Finally, we have analyzed several Tier 2 cities, providing Chongqing as an example above, and they all show similar patterns. Here the situation is unsurprisingly pretty much back to normal across the entire week. These cities are more isolated from the outside world, and need to go back into growth mode, so local governments might be more risk prone and decided to stoke the fires of economic activity across the board. There are few exceptions, which are however easy to explain. Take Hangzhou, which has normal levels of traffic except during weekends: Hangzhou is a hot local tourism destination, which shows that Chinese travellers are not yet fully in the mood for taking a weekend trip, even within its border, but we expect the situation to improve in the short term.