China’s economy is flat as the blockade hits factories and retailers

China’s retail and factory activity plummeted in April, widespread blockades by COVID-19 trapped workers and consumers in their homes, severely disrupted supply chains, and the world’s second-largest economic outlook. A long shadow was cast on.

In March and April, major centers across the country, including the most populous Shanghai, will be subject to full or partial lockdowns, damaging production and consumption and relying heavily on China for these global economies. Increased the risk of the part.

According to data from the National Statistics Bureau (NBS), retail sales in April fell 11.1% year-on-year, the largest reduction since March 2020.

Factory production fell 2.9% year-on-year, and anti-virus measures disrupted supply chains and paralyzed distribution, shattering expectations for an increase and maximum decline since February 2020.

Analysts now warn that China’s current recession may be harder to shake off than was seen at the start of the coronavirus pandemic in early 2020.

“As a result, we hope the worst is over, but we believe the Chinese economy will have a hard time returning to pre-pandemic trends,” said an analyst at Capital Economics.

Weak data sent China’s Best Equity Index .CSI300 A sharp turnaround from the morning rise put an end to the short rallies seen in other Asian markets on Monday.

Industrial output around the Yangtze River Delta, including Shanghai, fell 14.1% in April, while industrial output in northeastern China fell 16.9%. In both regions, retail sales plummeted by more than 30%.

In line with the unexpected decline in industrial production, China processed 11% less crude oil in April, with the lowest daily throughput since March 2020. Power generation fell 4.3% in the same month, the lowest since May 2020.

Hu Lin Hui, a spokesman for China’s Statistics Bureau, said in a press conference in Beijing on Monday, “The April epidemic had a relatively large impact on economic operations, but the impact was short-term and short-term. It was external. “

Mr Fu said he expects the economy to improve in May by curbing the outbreak of COVID-19 in Jilin, Shanghai and elsewhere.

With exports losing momentum, Beijing’s expectations of fixed asset investment to support its economy increased by 6.8% in the first four months, compared to the expected increase of 7.0%.

Consumption, employment hits

Data show that catering revenue in April fell by 22.7% due to the suspension of food service in some states. Car sales plummeted by 47.6% as automakers cut production amid empty showrooms and a shortage of parts.

Real estate sales were down 46.6% year-on-year, at least the fastest pace since 2010, as demand cooled due to the blockade of COVID-19.

Concerned about its weaknesses, economists demanded that the government distribute cash to the public.

The COVID shock has also affected the job market and is now regarded as the top priority policy for Beijing to maintain economic and social stability. China’s national survey-based unemployment rate rose to 6.1% in April, the highest since February 2020, below the government’s 2022 target of 5.5%.

Far goal

According to analysts, China’s official growth target for 2022, about 5.5%, seems to be becoming more and more difficult to achieve as authorities maintain a strict Zero-COVID policy. Economic growth was 4.8% in the first quarter.

Nee Wen, an economist at the Shanghai-based Fabao Trust, said long-term blockades in Shanghai and long-term testing in Beijing have raised concerns about growth for the rest of the year.

“If COVID suppression only affects the economy in April and May, it is still possible to achieve GDP growth of about 5% this year. However, the virus is highly infectious and will grow in the future. I’m still worried about. “

Given concerns over the Fed’s rate hike and the depreciation of the Chinese currency, Mr. Knee said authorities would be cautious about implementing quantitative measures such as sharp cuts in interest rates and bank reserve requirements. .. Instead, structural and targeted measures will be used for struggling sectors such as real estate.

As a sign of continued support, China’s central bank rolled over medium-term term life insurance loans, which mature on Monday, but interest rates on these loans remained unchanged for the fourth straight month.

ANZ analysts said the impact of the Shanghai blockade would be widespread.

“The total productivity of the factory has not caught up yet, and China’s growth is likely to remain at the lower end of the range of 4.0-5.0% over the next few years,” ANZ said. China’s economy is flat as the blockade hits factories and retailers

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