Demand for seafood in China is being hammered by COVID-19 related restrictions, with restaurant sales and retail sales both decreasing after a promising start to the year.
Restaurant sales dropped 16.4 percent in March 2022 compared to the same period in 2021, according to data published by the National Bureau of Statistics. The constriction comes after restaurant sales had grown 8.9 percent year-on-year in January and February.
Retail sales also shrank, dropping 3.5 percent in March 2022 compared to March 2021. Retail sales had also been positive in the previous two months, growing 6.7 percent year-on-year.
The contractions has international supplier to the Chinese market working to estimate the full impact that a severe lockdown in Shanghai and lockdowns of varying degrees in other cities have had on sales.
“Visibility on the market in the coming period is a challenge given the on-going COVID-19 omicron outbreaks and ensuing local restrictions,” Norwegian Seafood Council China Director Andreas Thorud said. “Currently, for instance, we see there is a COVID-19 lockdown-driven drop in demand for certain seafood products that are consumed in HORECA [hotel, restaurant, café] segments in large cities, especially Shanghai, for products like fresh salmon. However, once the lockdown clears, there are expectations to be a rebound taking place rather quickly.”
According to Thorud, as the government's reponse to the pandemic continues to evolve in China, processes at various ports and in cities could change quickly. And residents of China have had their spending ability impacted, reducing the demand for seafood, he said.
“Pandemic related mobility restrictions appear to have eroded Chinese spending power,” Thorud said.
Average household disposable income grew by 6.3 percent in the first quarter of 2022, lower than the 8.3 percent growth rate in pre-pandemic 2019.
“This does not bode well for the future consumption trends in China,” Natixis Economist Alicia Garcia Herrero.
The reduction in demand has shown in imports: China’s imports contracted 0.1 percent year-on-year in March, after growing by 15.5 percent in January and February. Exports grew 14.7 percent in March, compared to 16.3 percent in January and February 2022.
Despite the challenges, inflation appears to be less of an issue in China than it does in the European Union and the United States. China’s CPI increased from 0.9 percent year-on-year in January to 1.5 percent year-on-year in March, but core CPI – excluding food and energy – decreased from 1.2 percent year-on-year to 1.1 percent. That, Garcia Herrero said, is an indication of weak domestic demand.
Overall, the economic situation in China has shifted from its once-rapid GDP growth to a plateau – the economy grew 4.8 percent in the first quarter of this year, up from 4 percent in Q4 2021, and the government is targeting 5.5 percent GDP growth for 2022.
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