China’s economy is still growing amid the pandemic

The essence of growth

Most of China’s economic growth was recorded in January and February. In March, economic activity slowed as Shenzhen, the technology hub to the south, and then Shanghai, the largest city. of the country, along with other important industrial centers closed.

Retail sales in March fell 3.5% from a year ago, China’s National Bureau of Statistics said. Factory output in March increased by 5%, slower than the rate recorded in the first 2 months of the year. China’s imports, which increased in the first two months of the year, fell slightly in March, partly due to shipping difficulties. The slowdown in growth in March is expected to be worse than in April, with many areas being imposed with COVID-19 blockade measures, The New York Times reported.

China sets a growth target of “about 5.5%” this year. A week ago, Premier Li Keqiang called for a sense of urgency in limiting the impact of the COVID-19 lockdown on the economy. China’s central bank takes action on April 15 so commercial banks can get more loans to boost the economy.

“Speaking of the potential impact of the pandemic on Shanghai and Shenzhen, we cannot forget that they are important parts of the entire supply chain and it will certainly have an effect on the entire Chinese economy. China,” said Yao Jingyuan, former chief economist of China’s National Bureau of Statistics, at a press conference last week. National Bureau of Statistics spokesman Fu Linghui also said: “With the environment As domestic and international markets become increasingly complex and uncertain, economic development is facing significant difficulties and challenges.

The growth data did not fully reflect the profound impact of the blockade in Shanghai, AFP noted. China’s manufacturing growth earlier this year got a boost from spending during the Lunar New Year holiday but movement restrictions hit some parts of the country in March, disrupting businesses and keep consumers at home.

In recent days, executives in the auto industry and the tech sector, two of China’s biggest sources of job creation, have begun warning of nationwide disruptions if places, especially Shanghai, are not reopening anytime soon. Shanghai produces many high-tech components that are vital to many supply chains. “Shanghai is a hub for international auto companies – if the center fails, the whole system won’t work,” said Cui Dongshu, general secretary of the China Passenger Car Association.

The share of the local economy declined

According to Gavekal Dragonomics – an independent economic research firm that has tracked the lockdowns – as of April 11, 87 of China’s 100 largest cities had imposed some form of movement restrictions. Regulations range from limiting who can enter or leave the city to a complete blockade like the one in Shanghai. Yang Degang, director of a plastic molding machine factory in Zhangjiagang, 70km from Shanghai, was forced to suspend operations after the municipality imposed a blockade order on April 13.

According to Gavekal, from the end of March to the end of April 13, the number of major cities in severe blockade has decreased from 14 to 6 cities. The share of China’s economic output that these cities represent has fallen from 14% to 8%. Beijing has ordered local governments to help trucks reach their destinations and take other measures to protect the economy from harm during the lockdown.

For the world, China’s COVID-19 lockdown could cause inflation by further disrupting the supply chains on which many manufacturers depend, driving up production and transportation costs. China’s slowing growth has also caused it to import less from other countries from natural resources to consumer goods.

As China’s lockdown measures disrupt production, at least some Western importers are starting to look elsewhere for supplies…