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China's economy is suffering from the costs of the zero

2022-05-16T06:14:26.426Z

With almost brutal relentlessness, the Chinese authorities are fighting the spread of the corona virus. The population pays a high price for this – as does the economy.



Enlarge image

Queue in front of a test center: Numerous neighborhoods cordoned off

PHOTO: CARLOS GARCIA RAWLINS / REUTERS

The strict restrictions imposed by China's zero-Covid strategy are slowing down the second-largest economy more than expected.

Industrial production fell surprisingly in April by 2.9 percent compared to the same period last year, as reported by the statistics office in Beijing on Monday.

Retail sales also fell more sharply than analysts had predicted, by as much as 11.1 percent.

In addition, investments in property, plant and equipment were weaker than expected.

According to experts, the figures indicate that the downturn this year will be stronger than expected.

"Data for April activity has exposed the damage from lockdowns in Shanghai and other parts of the country," Chang Shu and Eric Zhu wrote in an analysis by Bloomberg news agency.

"The effects are much broader and deeper than expected."

Week-long lockdowns

The arrival of the fast-spreading omicron variant puts China's strict zero-Covid strategy to the test.

Tens of millions of people in metropolises such as Shanghai, Changchun or Jilin Province have been in lockdown for weeks and are not allowed to leave their homes.

Numerous neighborhoods in Beijing are cordoned off.

Most shops and many subway stations are closed.

Millions have to work from home.

The restrictions have seen a significant drop in freight traffic across the country.

Supply chains are broken.

Many companies had to stop or shut down production.

Container transport via the world's largest port in Shanghai has fallen sharply.

The delivery bottlenecks will also be felt in Germany through higher prices, according to experts' forecasts.

German and other European or foreign companies operating in China are also severely affected.

Growth target 5.5 percent

Despite the bad numbers, Statistics Bureau spokesman Fu Linghui tried to convey optimism to the press in Beijing.

"The Covid outbreak in April had a major impact on the economy, but the consequences will be short-term." The good long-term fundamentals of the Chinese economy are unchanged.

If the Covid measures make progress and the policy to stabilize the economy shows its effect, the economy can be expected to gradually recover.

Fixed investment fell slightly in April, down 0.82 percent year-on-year, but rose 6.8 percent year-to-date, in line with plan.

However, experts had expected slightly better numbers.

The increase reflects the government's efforts to increase spending on infrastructure to stimulate the economy.

The Chinese leadership had set a growth target of 5.5 percent for this year.

Whether the originally optimistic target can be achieved is becoming increasingly questionable, both because of the Covid outbreaks and the strict measures in China and because of the setback for the global economy caused by the Russian war in Ukraine.

mik/dpa-AFX

Source: spiegel

All business articles on 2022-05-16

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