China’s changed accounting method for coronavirus infections may have shifted the curve upwards, but it does not change its direction or its economic impact.
On Thursday, China reported a jump of more than 13,300 cases, the largest single day rise since the outbreak was reported in mid-January.
“We understand that most of these cases relate to a period going back over days and weeks and are retrospectively reported as cases, sometimes back to the beginning of the outbreak itself,” said Michael Ryan, executive director at the WHO Emergencies Programme.
“So this increase that you’ve all seen in the last 24 hours is largely down to a change in how cases are being diagnosed and reported.”
Although markets sold off in a knee-jerk reaction, economists are not rushing back to recalibrate their forecast models.
“The recalculation doesn’t have any additional economic impact. It’s only the methodology of counting and so it doesn’t matter if it is using route A or B. It also has no impact on the estimated time horizon calculation,” said Iris Pang, Greater China Economist at ING Bank.
The market focus lay elsewhere.
“Yes, the extent of the Covid-19 outbreak is larger than thought. But markets are chiefly concerned on whether the growth rate of new cases has peaked, and whether the current containment measures are working,” said DBS economist Wei Liang Chang.
“If so, this could mark a turning point when recoveries outpace new infections, bringing into sight the end of disruptions for the Chinese economy.”
And this is where there seems to be little consensus. Predictions about when the epidemic will end vary from March to June.
“We can only make a wild guess about this – a very raw assumption that this will disappear by the end of June. By that we mean that no new confirmed cases are reported,” said ING’s Pang.
Even before the change in accounting method, Pang had lowered her growth forecast for the world’s second-biggest economy to 5.4% from 5.8% in 2020. The reduction for Q1 was more severe with a growth estimate of 4%, down from 5.8%.
Capital Economics said in a report the change reflected a better grip on the true extent of past infections, rather than indicating a recent acceleration in the spread of the virus.
The jump in new cases and deaths reflects the inclusion of patients who have been diagnosed with Covid-19 by clinical means, such as chest X-rays, rather than laboratory tests which hospitals have been unable to ramp up quickly enough to diagnose all suspected patients, it said.
“If anything, the latest data continue to hint at a slowdown in new infections and a mortality rate lower than initially feared. As such, we don’t think the jump in reported cases will necessarily derail efforts to get businesses back up and running in the coming days,” the analysts said.
Even as the infections count climbed to more than 64,000 cases, analysts are beginning to see the positives in the changed method of accounting.
“The change in reporting methodology for diagnosed cases in Hubei province caused a sharp jump in the total cases on 13 February; however, the number of new cases, using the previous methodology, continued to decline. The change in methodology should also ease some concerns about under-reporting of cases,” said Barclays analysts in a report.