China’s warning as lockdowns to contain Covid outbreak bite into growth
China’s premier has issued an unusually harsh warning about the world’s second-largest economy, saying it must get back to normal as the country’s zero-Covid strategy bites into growth.
China is the last major economy welded to a policy of mass testing and rapid lockdowns to weed out virus clusters, but the tight restrictions have hurt businesses.
Restrictions imposed on dozens of cities in recent months – including the manufacturing hubs of Shenzhen and Shanghai as well as the breadbasket of Jilin – have tangled supply chains and dragged economic indicators to their lowest levels. for about two years.
In some ways, the challenges are now “greater than when the pandemic hit hard in 2020,” Premier Li Keqiang said at a State Council meeting on Wednesday, according to a reading by the news agency. Xinhua official.
“We are currently at a critical juncture to determine the economic trend for the whole year,” Li quoted Xinhua as saying.
“We must seize the time window and strive to get the economy back on a normal path.”
Li’s remarks are the latest in a growing chorus of calls from officials and business leaders for a better balance between stopping the virus and helping the struggling economy.
China’s retail sales fell 11.1% year-on-year in April while factory output fell 2.9% – the worst performance since the early days of the Covid crisis.
And the urban unemployment rate has returned to its February 2020 peak, defying policymakers’ annual growth target of around 5.5%.
In March and particularly in April, indicators such as employment, industrial production, electricity consumption and freight fell “significantly”, Li said at the meeting of the Business Council of China. State.
He stressed the importance of coordinating the fight against the virus and economic development, according to Xinhua.
The current outbreak in China – fueled by the highly transmissible variant of the Omicron virus – is the worst since the early days of the pandemic in 2020.
Its largest city and business hub, Shanghai, has been almost completely sealed off since April, crushing businesses, while curbs are felt in the capital Beijing.
The government has offered tax relief and a bond campaign to help industries, and President Xi Jinping earlier called for a “total” infrastructure push.
But analysts have warned that growth will continue to falter until China eases its rigid virus controls.
S&P Global Ratings this month lowered its full-year growth forecast for China from 4.9% to 4.2% due to Covid restrictions.
And Nomura analysts warned in a recent note that there is “growing potential for negative GDP growth in the second quarter.”
Wednesday’s State Council teleconference involved an unusually large group of provincial, municipal and county officials, Chinese newspaper The Economic Observer reported.
The economic troubles come in a pivotal political year for Xi, who is eyeing another term in power at the Communist Party Congress this fall.
(Except for the title, this story has not been edited by NDTV staff and is published from a syndicated feed.)