China counts cost of lockdowns
Factory production, retail sales slump
BEIJING: China’s retail and factory activity fell sharply in April as wide Covid-19 lockdowns confined workers and consumers to their homes and severely disrupted supply chains, casting a long shadow over the outlook for the world’s second-largest economy.
Full or partial lockdowns were imposed in major centres across the country in March and April, including the most populous city Shanghai, hitting production and consumption and heightening risks for those parts of the global economy heavily dependent on China.
Retail sales in April shrank 11.1% from a year earlier, the biggest contraction since March 2020, data from the National Bureau of Statistics (NBS) showed yesterday.
Factory production fell 2.9% from a year earlier, dashing expectations for a rise and the largest decline since February 2020, as anti-virus measures snarled supply chains and paralysed distribution.
Analysts now warn China’s current downturn may be harder to shake off than the one seen during the onset of the coronavirus pandemic in early 2020, with exports unlikely to swing higher and policymakers limited in their stimulus options.
“The upshot is that while the worst is hopefully over, we think China’s economy will struggle to return to its pre-pandemic trend,” Capital Economics analysts said.
Industrial output around the Yangtze
River Delta, which includes Shanghai, fell 14.1% in April, while that in China’s northeast shrank 16.9%. Both regions saw a more than 30% dive in retail sales.
In step with the unexpected industrial output decline, China processed 11% less crude oil in April, with daily throughput the lowest since March 2020. In the same month, power generation fell 4.3%, the lowest since May 2020.
“In April, the epidemic had a relatively big impact on the economic operation, but this impact was shortterm and external,” Fu Linghui, a spokesperson at China’s statistics bureau, said at a press conference in Beijing.
Fu said he expected economy to improve in May with Covid-19 outbreaks in Jilin, Shanghai and other places coming under control.
Data showed a 22.7% drop in catering revenue in April as dining-out services were suspended in some provinces. Auto sales plunged 47.6% as carmakers slashed production amid empty showrooms and parts shortages.
Property sales by value slumped 46.6% from a year earlier, the fastest pace since at least 2010, as Covid-19 lockdowns chilled demand.
Worried about the weakness, economists have called for cash handouts from the government to the population.
The Covid shock also weighed on the job market, seen now as a top policy priority for Beijing to maintain economic and social stability. China’s nationwide survey-based jobless rate rose to 6.1% in April, the highest since February 2020 and above government’s 2022 target of below 5.5%.
Analysts say China’s official 2022 growth target of around 5.5% is looking harder and harder to achieve as officials maintain draconian zero-Covid policies. The economy grew 4.8% in the first quarter.
“The extended lockdown in Shanghai and prolonged testing in Beijing are adding to the concerns about growth for the rest of the year,’’ said Nie Wen, a Shanghai-based economist at Hwabao Trust.
“It’s still possible to achieve a GDP growth of around 5% this year if Covid curbs are only going to affect the economy in April and May. But the virus is so infectious, and I remain concerned about growth going forward.”