Indirect Evidence of the Impact of the Wuhan Coronavirus

As the number of acknowledged diagnosed cases of COVID-19 rises again in China, indirect evidence of what is happening there is beginning to emerge that might challenge the official reports. The most dramatic, reported by the BBC, is NASA pictures contrasting Chinese air pollution in January and today:

Satellite images have shown a dramatic decline in pollution levels over China, which is “at least partly” due to an economic slowdown prompted by the coronavirus, US space agency Nasa says.

Nasa maps show falling levels of nitrogen dioxide this year.

It comes amid record declines in China’s factory activity as manufacturers stop work in a bid to contain coronavirus.

China has recorded nearly 80,000 cases of the virus since the outbreak began.

There’s also a comparison with the same period last year so it’s not merely seasonal variation.

Maybe the Chinese authorities are operating through an abundance of caution, minimizing the scale of the outbreak to reduce the likelihood of panic. That wouldn’t be particularly nefarious—our authorities are doing the same thing even as the media try to heighten concern. Or maybe they’re reporting what they’re actually finding.

Additionally, the Wall Street Journal reports that the manufacturing purchasing managers’ index in China has fallen to a record low:

BEIJING—Official gauges of China’s factory and nonfactory activity plunged to record lows in February as the nation’s economy struggled to resume normal production as it faced the coronavirus epidemic.

The official manufacturing purchasing managers index tumbled to 35.7 in February from 50 in January, indicating a deep contraction. February’s reading from the National Bureau of Statistics on Saturday was the first official data for a full month of economic activity in China since the coronavirus began affecting the economy in late January.

The index dropped to 38.8 in November 2008, when the financial crisis prompted steep losses on Wall Street and sent shockwaves through the global economy. The 50 mark separates expansion from contraction.

Adding to the gloom, China’s nonmanufacturing PMI, also released on Saturday, sank to a record low of 29.6 in February from 54.1 in January. The nonmanufacturing PMI covers such services as retail, aviation and software as well as real estate and construction.

The factory index indicated contraction for most of 2019, hit by a trade war between the U.S. and China. It didn’t cross back into expansion until late last year, when trade tensions between the two sides eased.

The February result came in far below the median forecast of 43 by economists surveyed by The Wall Street Journal. Purchasing by manufacturers is a leading indicator of business activity because factories buy supplies in anticipation of demand.

Saturday’s results show a “relatively large impact” from the epidemic, Zhao Qinghe, an analyst with the statistics bureau, said in a statement accompanying the data release. March’s readings should improve because of authorities’ efforts to help companies, especially manufacturing firms, resume production, he said.