At the center of coronavirus outbreak, Hubei Province has undergone hardships combating the disease. The province contributed to 4.6% of national GDP in 2019, with output splitting 9%/43%/48% between primary/secondary/tertiary industries. Overall speaking, we think the interruption of provincial economic activities has limited contagion effect nationwide, as long as the other regions stay healthy. However, given Hubei’s relative high share in certain industrial products, such as motor, optical cables, monitors, air conditions etc., we should pay attention to negative supply-side shocks of these industries that may ripple through the supply chain if suspension continued.
- Hubei contributed to 4.6% of national GDP in 2019, and ranked No. 7 among all provinces, municipalities and autonomous regions. Economic growth in Hubei has been outpacing the nation since 2007 and recorded 7.5% in 2019 (vs. 6.1% of nation). GDP per capita was RMB 66,616 in 2018, exceeding national figure by roughly RMB 600. Per capita disposable income was RMB 34,455 in 2018, representing 88% of national average.
- Higher manufacturing share. Motor industry accounted for 17.1%. Hubei possesses a relatively higher manufacturing share compared to the national average. Motor industry accounted for 17.1% of manufacturing output in 2018. Cars produced in Hubei, including passenger as well as commercial vehicles, occupied 8.7% of the market share nationwide. In addition to cars, Hubei also has an indispensable role in producing optical cables (27.5% of national share), air conditioners (9%), monitors (7%), etc.
- Transport hub connecting people as well as goods. In 2018, passenger and freight traffic volume of Hubei represented 5.5% and 4.0% of the entire nation, respectively. Particularly, road freight traffic amounted to 22.3% of the whole nation. Therefore, restricted traffic in Hubei is one of the key channels that shocks get spread to other regions.
- Policy suggestions. 1) Provide material help to ensure employment and secure household income in Hubei; 2) prioritize back-to-work of key manufacturing industries; 3) release freight traffic restrictions whenever appropriate; 4) target more fiscal and banking resources to help the province regain economic strength.
