China economy: coronavirus slowdown accelerates as retail sales, industrial production slump

CHINA (May 16, 2022)—China’s economic slowdown continued in April amid the prolonged disruption to production and mobility caused by stringent coronavirus controls, data released on Monday showed.

Industrial production, a gauge of activity in the manufacturing, mining and utilities sectors, fell by 2.9 per cent in April from the previous year, the National Bureau of Statistics (NBS) confirmed.

This was the lowest since China’s industrial production dropped by 25.87 per cent in February 2020 and was below market expectations for a rise of 1.1 per cent from 5 per cent growth in March.

May be an image of text that says 'China's monthly retail sales Percentage growth 40 -20.. 30/11/2017 31/03/2020 Source: NBS 31/04/2022 SCMP'

Restrictions across the country, especially the lockdown of China’s most prosperous city of Shanghai since late March, have continued to hit consumption, with retail sales dropping by 11.1 per cent in April, larger than an expected drop of 6 per cent.

This was the lowest since China’s retail sales dropped by 15.8 per cent in March 2020.

Retail sales had fallen by 3.5 per cent in March, in what was the first decline since July 2020.

Fixed-asset investment, a gauge of expenditure on items including infrastructure, property, machinery and equipment that Beijing has relied on this year to stem downturn risks, rose by 6.8 per cent in the first four months from the previous year, down from the rise of 9.3 per cent in the first quarter.
 
“The outbreaks in April had a great impact on the economy, but the impact was short-term and external,” said NBS spokesman Fu Linghui.
 
China is struggling to contain Omicron outbreaks while also trying to achieve solid economic growth and stabilize job creation.
 

But its strict zero-COVID policy, the turbulence of global commodities prices, and interest rate increases in the United States have challenged its growth target of “around 5.5 per cent” for this year.

May be an image of text that says 'China's urban unemployment rate Survey-based 01/2018 03/2020 Source: NBS 04/2022 SCMP'

The surveyed jobless rate, an imperfect measurement of unemployment in China that does not include figures for the nation’s tens of millions of migrant workers, stood at 6.1 per cent in April from 5.8 per cent in March.

“China’s economic activity contracted in April and was the most severe since the first quarter of 2020 during the first wave of COVID outbreak,” said Tommy Wu, lead China economist at Oxford Economics.

“The prolonged Shanghai lockdown and its ripple effect through China, as well as logistics delays resulting from highway controls in parts of China, have severely affected domestic supply chains.”

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Source:China Micro Economy

 

 

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