China avoids second Covid wave, but market recovery slower than expected
Nearly six months on from China dropping its zero-Covid policy, consumer spending on seafood has risen, but not by as much as some experts had expected.
China’s consumer price index rose just 1 percent in February 2023, while producer prices fell 1.4 percent, suggesting demand for goods in the domestic economy remains tepid even as China’s exports have faced weaker demand from Western markets beset by inflation.
China suffered a spike in deaths and illnesses in December, in the weeks following the government’s abrupt end to its zero-Covid policy, under which the country had limited the spread of the disease but caused severe disruptions to its domestic and international trading. But since then, the country appears to have avoided a second wave of Covid, and while the market is currently in the traditional post-Chinese New Year lull, the Chinese clients of seafood trading firm Roda International are “positive” about the future, according to the firm’s chief executive. However, Resnik said he expects higher prices for imported shrimp, driven in part by recovering Chinese demand.
The extent of China’s post-Covid recovery remains in question given the country’s economy remains beset with structural problems. Chinese Communist Party economic czars made no mention of stimulus spending during the annual National People’s Congress in March as the country continues efforts to defuse the threat of a heavily leveraged real estate sector, one of the traditional drivers of the Chinese economy. This has forced policymakers to announce a target for economic growth in 2023 of 5 percent, lower than anticipated.
Robin Wang, the CEO of Shanghai-based seafood marketing consultancy SMH International, said despite the challenges facing China’s economy, he’s seeing “many of the right signs” for a recovery in seafood market sales this year.
“Clients are shifting from a wait-and-see approach to actively inquiring about product information and enquiring about prices,” Wang told SeafoodSource.
There has been an uptick in China’s seafood imports since the beginning of the year, according to Wang, and the reopening of China’s tourism sector is going to drive additional demand for seafood from the hospitality sector through the rest of the year. Wang predicted a “greater focus on health and the consumption of seafood” in the wake of the pandemic, and said he took it as a good sign a new political advisory committee on “environment and resources” has been added to the National Committee of the People’s Political Consultative Conference, an advisory body.
“This could put more of a spotlight on seafood and sustainability this year,” Wang said.
China was the world’s top source of outbound tourists prior to the pandemic, with USD 255 billion (EUR 234 billion) spent abroad in 2019. Many of those tourists headed to Hong Kong, where seafood consumption was heavily dented by the pandemic.
Benjamin So, the CEO of 178 Degrees, a Hong Kong-based seafood importer and distributor, said he expects the city’s recovery will take several years.
“We’ve come from a very tough place,” he said. “Continued relaxing [of Covid restrictions] has had some [positive] effect. However, we require a bit of time to get back to where we were five years ago. We’re headed in the right direction, but we are a long way off.”
Hong Kong’s economy has not grown at the rate it had been before the political protests that began in 2018. The city’s traditional reliance on tourism, with hospitality and retail sales driven by mainland visitors, means much will depend on the rebound in Chinese travel numbers, So said.
“The return hasn’t happened yet,” he told SeafoodSource.
The pandemic’s sharp impact on Hong Kong has also stunted work on a sustainability initiative for the local seafood sector. The Hong Kong Sustainable Seafood Coalition (HKSSC), of which 178 Degrees is a member, has seen a drop in membership, even though the annual fee is just HKD 5,000 (USD 650, EUR 600), So said.
“Survival comes first,” he said.
In Shenzhen, China, there’s been a reawakening of trade, according to Fan Xubing, the head of Beijing-based seafood marketing consultancy Seabridge. He said local markets were “very busy” during a visit in early March.
There remains a strong demand for “most items,” Fan told SeafoodSource, including crab and lobsters. There is particularly strong demand across China for pangasius, which has become a staple of the local catering industry, according to Fan, who also reported strong prices for lobster and cold-water shrimp.
But there’s hasn’t yet been a resurgence of interest in China from overseas exporters …
Photo courtesy of Benjamin So/178 Degrees