Shutdowns cause China’s economy to shrink

BEIJING — China’s economy contracted in the three months ending in June compared with the previous quarter after Shanghai and other cities shut down to fight coronavirus outbreaks, but the government said a “stable recovery” is under way after businesses reopened.

The world’s second-largest economy shrank by 2.6%, down from the JanuaryMarch period’s already weak 1.4%, official data showed Friday. Compared with a year earlier, which can hide recent fluctuations, growth slid to 0.4% from the earlier quarter’s 4.8%.

Activity was “much weaker than expected,” Rajiv Biswas of S&P Global Market Intelligence said in a report.

Anti-virus controls shut down Shanghai, site of the world’s busiest port, and other industrial centers starting in late March, fueling concerns global trade and manufacturing might be disrupted. Millions of families were confined to their homes, depressing consumer spending.

Factories and offices were allowed to start reopening in May, but economists say it will be weeks or months before activity is back to normal. Economists and business groups say China’s trading partners will feel the impact of shipping disruptions over the next few months.

“The resurgence of the pandemic was effectively contained,” the statistics bureau said in a statement. “The national economy registered a stable recovery.”

Data on factory output, consumer spending and other activity suggest overall growth was even weaker than the headline figure, Julian Evans-Pritchard of Capital Economics said in a report.

“Even accounting for June’s strength, the data are consistent with negative y/y (year-on-year) growth last quarter,” EvansPritchard wrote.

The slump hurts China’s trading partners by depressing demand for imported oil, food and consumer goods.

Repeated shutdowns and uncertainty about business conditions have devastated entrepreneurs who generate China’s new wealth and jobs.