China’s Economy Slows After Ukraine War Blows, COVID Lockdowns & Local Politics: NPR

China’s once buoyant economy is slowing down. Analysts say this is due to successive coronavirus shutdowns, Russia’s invasion of Ukraine and restrictive trade policies.



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In China, the repercussions of the war in Ukraine, as well as local factors, are creating great challenges for the country’s economy. NPR’s Emily Feng reports that the uncertainty is causing widespread discontent.

EMILY FENG, BYLINE: Fang Wugen has worked her whole life. He had to do this to escape the poor farming village in southern Jiangxi Province where he grew up. So in 1995 he traveled to Shenzhen, then a manufacturing export hub and later to China’s Silicon Valley.

FANG WUGEN: (Through an interpreter) My family sold a pig for my travel expenses.

FENG: And in Shenzhen, Fang has worked in all kinds of electronic factories and assembly lines so far. For the first time in nearly three decades, he can’t find a factory that will hire him.

FANG: (Through interpreter) Workers like me cannot find work. Many factories are closed and do not need employees. The market is down. People marry less, have fewer children. Real estate developers are building less. All of this means fewer jobs for us.

FENG: Like dozens of cities across China, Shenzhen had to temporarily shut down in March. There were only a handful of cases, but under China’s zero-tolerance policy, that means mass quarantines and testing, especially in small, informal factories. Ongoing costs and disruption from China’s tight COVID controls, along with falling demand for real estate and consumer goods, led Premier Li Keqiang in February to set the highest economic growth target. bottom of the country in three decades.

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LI KEQIANG: (Through interpreter) We need to make progress but ensure stability in the face of new downward pressures.

FENG: And compounding that economic stress – strained US-China relations and the invasion of Ukraine by Russia, China’s political partner. Earlier in March, these worries caused China’s stock indexes to fall 40% in one day.

ANNE STEVENSON-YANG: Money seeks safety now, and safety is not China.

FENG: Anne Stevenson-Yang is director of J Capital Research, a China-focused research firm. She says U.S.-led sanctions against Russia, particularly those that cut it off from the SWIFT financial messaging system that helps move money, have really spooked global investors in China.

STEVENSON-YANG: The idea that you can be kicked out of this system and your reserves can be frozen – that must give them a very serious break. Many people collected renminbi in China as the renminbi appreciated and the economy was doing well. But now they are worried about whether they can get him out.

FENG: What finally cooled this financial drama in the Chinese stock market was an extraordinary meeting on financial stability, chaired by Liu He, Vice Premier and Economic Advisor. At this meeting, Liu reassured investors. Foreign-funded enterprises are essential, Liu said at the meeting. He also said there was a need to create a favorable market environment for entrepreneurs. This is Alicia Garcia-Herrero, chief economist for Asia-Pacific at Natixis, a French bank.

ALICIA GARCIA-HERRERO: Liu’s speech should be read as a show of fear, not a show of force.

FENG: As in, policymakers fear falling back into an economic downturn. Liu’s speech is also interpreted as a reaction against hasty over-regulation that could further stunt growth.

GARCIA-HERRERO: There are two forces – the market-based regulators and the security-based kind of regulators. And I think there’s a bit of a power struggle.

FENG: So far, security regulators are stronger. There has been a crackdown on property companies and their debt – a big deal for sure, but the crackdown has put enormous financial pressure on local governments and the developers that the economy relies on. There are new financial and data rules that have made it much harder for internet companies to raise foreign capital and attract users. Then a series of education regulations wiped out a lucrative tutoring and crash course – a billion-dollar industry in China. All of this has led companies to cut jobs, leaving people like Zhang Yi, a software engineer, out of work.

ZHANG YI: (Through an interpreter) The livestream industry is failing. Blockchain software companies are no longer allowed, and fintech services are also banned from many activities.

FENG: A few years ago, Zhang, a former engineer, switched to writing software to take advantage of China’s consumer technology boom. Talent was so scarce that it was being poached by startups every year or so. Not anymore. I ask him, how many resumes did you send out?

ZHANG: (Through an interpreter) I think I submitted 400 or 500 job applications this year.

FENG: After two months of job hunting, Zhang has only gotten a handful of interviews so far. One of them is the day before our conversation, but like all the other apps, it never got a response. Emily Feng, NPR News, Beijing.

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