Coronavirus: Signs of China recovery gives Europe, other countries grappling with coronavirus hope

The number of new Covid-19 infections in China has fallen sharply after draconian lockdowns were imposed. Photo / Getty Images

The Chinese economy has offered a glimmer of hope for Europe and other countries grappling with the Covid-19 pandemic after signs of a recovery emerged as Beijing eases back restrictions.

Proxy indicators tracking the world's second-largest economy point to a sharp improvement from last month's nadir, with steel demand and coal consumption recovering back towards normal levels.

Rising domestic air travel, traffic congestion and pollution also suggest China's coronavirus-hit economy is starting to bounce back as factories, ­offices and shops reopen.

Steel demand has rebounded sharply to catch up to last year's levels, while coal consumption of electricity producers is now down just a 10th year on year, Goldman Sachs revealed.

Climbing pollution levels in the Chinese province of Hubei, the epicentre of the outbreak, also point to a pickup in economic activity, according to UBS.

Jeremy Brunelli, analyst at UBS Evidence Lab, said: "Data for Hubei province show sulphur dioxide levels dropped off – consistent with the lockdown – then started to bottom and are starting now to trend up, even when adjusted for seasonal effects and precipitation."

The number of new Covid-19 infections in China has fallen sharply after draconian lockdowns were imposed. It reported no new local cases of the virus on Thursday and Friday as Europe ­becomes the focus of health officials. The shape of any economic recovery in China will be closely watched as the ­virus looks set to tip the global economy into recession.

"Compared to previous years, it is still low but improving," said Joanna Davies, economist at Fathom Consulting on the alternative measures.

"Arguably the recovery that is going on in China is a massively important global question. The recovery in China will help infer what we should expect globally to happen."

Economists track alternative proxy measures for China's economy amid widespread distrust of Beijing's official growth measures. Forecasters have warned that China suffered an unprecedented contraction in the first quarter as Beijing battled the virus.