China's economy cools sharply as lockdowns bite
China's economic activity cooled sharply in April as widening COVID-19 lockdowns took a heavy toll on consumption, industrial production and employment, adding to fears the economy could shrink in the second quarter.
Full or partial lockdowns were imposed in dozens of cities in March and April, including a protracted shutdown in commercial centre Shanghai, keeping workers and shoppers confined to their homes and severely disrupting supply chains.
Retail sales in April shrank 11.1 per cent from a year earlier, the biggest contraction since March 2020, data from the National Bureau of Statistics (NBS) showed yesterday. The reading worsened from March's 3.5 per cent fall and missed the forecasts for a 6.1 per cent drop.
Dining-out services were suspended in some provinces and China's auto sales in April plunged 47.6 per cent from a year earlier as car makers slashed production amid empty showrooms and parts shortages.
As the anti-virus measures snarled supply chains and paralyzed distribution, industrial production fell 2.9 per cent from a year earlier, notably worse than a 5 per cent gain in March and was below expectations for 0.4 per cent growth. The reading was the largest decline since February 2020.
The shock also weighed on the job market, which Chinese leaders have prioritised for economic and social stability. The nationwide survey-based jobless rate rose to 6.1 per cent in April from 5.8 per cent, the highest since February 2020 when it stood at 6.2 per cent.
The government aims to keep the jobless rate below 5.5 per cent in 2022.
China wants to create more than 11 million jobs, and preferably 13 million urban jobs this year, Premier Li Keqiang said in March, but he recently called the country's employment situation "complicated and grim" following the worst COVID-19 outbreaks since 2020.
Fixed asset investment, a main driver that Beijing is counting on to prop up the economy as exports lost momentum, increased 6.8 per cent year-on-year in the first four months, compared with an expected 7 per cent rise.
Oil refinery output
Data from the NBS also showed yesterday that China processed 11 less crude oil in April than a year earlier, with daily throughput falling to the lowest since March 2020 as refiners slashed operations on weaker demand due to widespread COVID-19 lockdowns.
Crude throughput last month was 51.81 million tonnes, equivalent to 12.61 million barrels per day (bpd). This compared with 13.8 million bpd in March and 14.09 million bpd in April last year.
Processing volumes for the January-april period were down 3.8 per cent on the year at 223.25 million tonnes, or 13.58 million bpd.
With tight lockdowns that first centred in the financial hub of Shanghai before spreading across the nation, China's demand for refined oil products has been falling, with gasoline and aviation fuel the worst hit.
To counter slowing fuel sales and bulging inventories, state refiner Sinopec began reducing operations since the second half of March to around 86 per cent of capacity, down from 92.5 per cent earlier in the year.
Independent plants, concentrated in the eastern province of Shandong, were operating at less than half their capacity last month with many running at their lowest levels since 2016.
"Demand was terrible and margins were so thin that plants ended up losing more money if processing more crude oil," said a trading manager with a Shandong-based refiner.
China's overall vehicle sales for April plunged almost 48 per cent from a year earlier as COVID-19 lockdowns hit factories and showrooms. Sales in the first four months of 2022 dropped 12 per cent from the same period a year earlier in the world's largest vehicle market.
The NBS data also showed 4per cent increase in crude oil production to 17 million tonnes last month, or 4.14 million bpd, as national oil giants followed Beijing's order to boost domestic supply security.
Production in the January-april period gained 4.3 per cent compared with a year earlier.
Natural gas production grew 4.7 per cent in April to 17.7 billion cubic meters and output year-to-date rose 6.2 per centversus the same period of 2021. The high global gas prices, especially of spot liquefied natural gas , have driven consumers to use more of cheaper domestic supplies.