Vaccine rollout will accelerate - Capital Economics
China Economics

Vaccine rollout will accelerate

China Economics Weekly
Written by Mark Williams
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China appears once again to have successfully crushed the recent COVID-19 flare-up. Its vaccination campaign is looking less impressive and the original target for inoculations by Lunar New Year appears to have been missed. But these are early days. Limited production capacity is unlikely to be a major constraint on the rollout for long. The Chinese people’s compliance with other pandemic control measures suggests that a vaccination drive would be effective. We expect the vaccination programme to expand rapidly over coming weeks.

China has again shown its prowess in extinguishing COVID-19 flare-ups: infections were reported in 24 of China’s 31 provinces in January; no new cases of domestic transmission were found anywhere in China this week.

The vaccination programme is looking less impressive. According to yesterday’s update, 40.5 million doses have now been administered. That’s only just behind world leader the US (43.2 million), and not too far off the original official target (since pushed back to March) of 50 million inoculations by Lunar New Year. (See Chart 1.) But in per capita terms, this this is a mere pinprick: on these trends, China wouldn’t achieve herd immunity for years.

Chart 1: Total Coronavirus Vaccine Doses Administered (million)

Sources: OurWorldInData, Capital Economics

But these are early days. The slow start has been blamed on hesitancy among the population due to concerns over safety and the level of protection, and supply constraints for both vials and vaccines. Both are constraints the authorities are well-equipped to tackle: the success of the much more disruptive campaign to curtail travel during the spring festival – for many, the only chance for a trip home all year – gives good reason to think that a vaccination drive would also succeed (and the health apps that govern access to many places provide a ready means to encourage compliance). China’s economy rarely struggles to increase industrial capacity.

Of course, much depends on the leadership’s goals. Vaccination is less pressing than elsewhere, but China still has good reason to inoculate its population and some apparently effective vaccines. The recent flare-up of infections – the worst since the original outbreak – underlines that China is still at risk as long as COVID-19 hasn’t been eliminated globally. The leadership may have been caught by surprise at the speed at which some other countries have been able to roll out vaccination campaigns and that has left it playing catch-up. But we wouldn’t expect China to remain a laggard for long.

Staying put for Lunar New Year

The “Spring Festival travel season” officially runs until early March. But since today is Lunar New Year’s Eve, the government can reasonably declare its campaign to discourage travel a success. Long-distance travel has been running at about 30% of level ahead of Lunar New Year in 2020 (just before lockdown began). (See Chart 2.) The recent drop in infections hasn’t led to a rebound in trips taken.

Chart 2: Long-Distance Travel (person-km, % y/y)

Sources: Ministry of Transport, CEIC, Capital Economics

Our view remains that while this is another blow to travel and tourism, the economic impact will be more than offset by factories and construction sites being able to stay open longer.

The week ahead

Markets will be closed in Hong Kong until Monday and on the mainland until Wednesday inclusive. The Year of the Ox starts tomorrow – if you are celebrating, we wish you a happy new year. 新年快乐,恭喜发财!


Economic Diary & Forecasts

Upcoming Events and Data Releases

Date

Country

Release/Indicator/Event

Time (China)

Previous*

Median*

CE Forecasts*

February

11th – 17th

Chn

Lunar New Year (National Holiday)

12th – 15th

HK

Lunar New Year (National Holiday)

Thu 18th

HK

Unemployment Rate (Jan.)

16.30

6.6%

6.9%

6.9%

Fri 19th

Chn

Current Account Balance – Preliminary (Q4)

+40.1bn

Also expected during this period:

TBC

Chn

Government Revenue and Expenditure (Jan.)

TBC

Chn

PBOC Balance Sheet data (Jan.)

TBC

Chn

CBRC Data on Assets and Liabilities of Financial Institutions (Jan.)

Selected future data releases and events:

February

Sat 20th

Chn

Foreign Exchange Net Settlement and Receipts (Jan.)

Mon 22nd

Chn

1-Year Loan Prime Rate

HK

Consumer Prices (Jan.)

Tue 23rd

Chn

Home Prices 70 Cities (Jan.))

Wed 24th

HK

GDP (Q4, q/q(y/y))

Thu 25th

HK

Trade Data (Jan.)

Main Economic & Market Forecasts

%q/q annualised (%y/y), unless stated

Latest

Q1 2021

Q2 2021

Q3 2021

Q4 2021

Q1 2022

2020e

2021f

2022f

Official GDP

(+6.5)*

(+21.0)

(+9.0)

(+7.0)

(+5.5)

(+5.0)

(+2.3)

(+10.0)

(+4.5)

GDP (CE CAP-derived estimates)

(+7.6)*

(+31.0)

(+10.0)

(+5.0)

(+2.5)

(+3.0)

(+1.0)

(+10.0)

(+3.5)

Consumer Prices

(-0.3)**

(+0.9)

(+1.8)

(+1.5)

(+1.4)

(+1.4)

(+2.5)

(+1.5)

(+1.5)

Producer Prices

(+0.3)**

(+1.0)

(+2.5)

(+2.0)

(+1.5)

(+1.3)

(-1.8)

(+2.0)

(+0.5)

Broad Credit (AFRE)

(+13.0)**

(+12.0)

(+11.0)

(+10.0)

(+9.0)

(+8.0)

(+13.3)

(+9.0)

(+7.5)

Exports (US$)

(+18.1)***

(+27.0)

(+14.0)

(+2.0)

(+3.0)

(-2.0)

(+3.6)

(+10.0)

(+1.5)

Imports (US$)

(+6.5)***

(+17.5)

(+22.5)

(+12.5)

(+8.0)

(+7.0)

(-1.1)

(+15.0)

(+6.0)

RMB/$

6.46

6.40

6.30

6.20

6.20

6.20

6.54

6.20

6.20

7-day PBOC reverse repo %

2.20

2.30

2.40

2.50

2.50

2.50

2.20

2.50

2.50

1-year Loan Prime Rate (LPR) %

3.85

3.95

4.05

4.15

4.15

4.15

3.85

4.15

4.15

1-year MLF Rate %

2.95

3.05

3.15

3.25

3.25

3.25

2.95

3.25

3.25

10-year Government Bond Yield %

3.24

3.20

3.10

3.00

2.80

2.70

3.20

2.80

2.60

RRR (major banks) %

12.5

12.5

12.5

12.5

12.5

12.5

12.5

12.5

12.0

CSI 300 Index

5,808

5,550

5,600

5,650

5,700

5,825

5,211

5,700

6,200

Hong Kong GDP

(-3.0)*

(+3.0)

(+5.5)

(+4.5)

(+6.5)

(+7.5)

(-6.1)

(+5.0)

(+5.5)

Hang Seng Index

30,039

29,450

30,125

30,800

31,250

31,200

27,231

31,250

35,360

Sources: Bloomberg, CEIC, Capital Economics *Q4; **Jan.; ***Dec.; End of period


Mark Williams, Chief Asia Economist, mark.williams@capitaleconomics.com
Sheana Yue, Assistant Economist, sheana.yue@capitaleconomics.com