Official: Chinese economy recovers as anti-virus measures ease
BEIJING (AP) — China’s factory and consumer activity fell even more than expected in April under virus checks, official data showed Monday, but a Cabinet official said the economy was picking up as that the anti-virus brakes were easing and that its commercial capital of Shanghai is reopening.
The collapse of the second-largest economy has fueled fears that global manufacturing and trade could be disrupted after most businesses in Shanghai shut down and its 25 million people confined to their homes from late March. This adds to complications for President Xi Jinping in a year when he is expected to try to extend his term in power.
Retail sales fell 11.1% from a year ago after shops, restaurants and other outlets closed in Shanghai and other cities, according to the National Bureau of Statistics. Manufacturing fell 2.9% due to plant closures.
This month’s business appears to be improving due to strong electricity demand and increased freight transportation, bureau statistics chief Fu Linghui said at a press conference. . He said about half of Shanghai’s 9,000 biggest industrial companies were back to work as outbreaks in China’s biggest city were contained.
“We believe the functioning of the economy is gradually improving,” Fu said. “The pace of consumption recovery will accelerate as the impact of the epidemic is brought under control.”
The ruling Communist Party is trying to reverse a deepening downturn without giving up on “zero-COVID” tactics that have also shut down sections of Beijing and other major cities to isolate every infected person. Economists cut this year’s growth forecast to 2%, well below the ruling party’s target of 5.5% and last year’s 8.1% expansion.
“There is still considerable uncertainty and downside risk to the short-term outlook for China if further outbreaks of Covid-19 were to occur in other major urban areas,” S&P Global Market Intelligence’s Rajiv Biswas said in a statement. an email.
The economy was already weak before the latest outbreaks after Beijing clamped down on debt in its vast property sector that Chinese leaders fear is dangerously high. It triggered a slump in construction and home sales, industries that support millions of jobs.
China kept case numbers low earlier this year with a strategy that shut down cities of tens of millions of people. This sparked complaints of skyrocketing human and economic costs, leading the ruling party to move to closing down infected buildings or neighborhoods. But with thousands of new cases reported every day, it has led to the closure of large sections of Beijing and other cities.
Dozens of neighborhoods in Beijing, Shanghai and other cities are considered high or medium risk in a list released Sunday by the National Health Commission, which requires stores and some other businesses to close. Other cities include Shenjiang to the south, Guang’an to the southwest, and Harbin, Dandong, and Yingkou to the northeast.
Ruling party leaders said after a May 5 meeting that containing outbreaks would take priority over the economy.
Chinese officials have called for the virus to be brought under control ahead of a ruling party meeting in October or November in which Xi is expected to try to break with tradition and give himself a third five-year term in office.
The economy grew anemic 4.8% from a year earlier in the three months to March. That was an improvement from 4.1% in the previous quarter, but forecasters say activity in the three months to June could weaken.
Based on the latest data, activity in the current quarter could contract by 1% compared to a year ago, according to Iris Pang of ING.
“Our concern is whether China will have lockdowns elsewhere,” Pang said in a report. “Any city that has to endure a month-long lockdown will see its GDP shrink on a year-over-year basis for that month.”
Shanghai, China’s wealthiest city, will gradually reopen shopping malls, vegetable markets, hair salons and other businesses from Monday, the government said.
A deputy mayor, Zong Ming, said the number of people in Shanghai who are barred from leaving their homes has fallen below one million, according to the official Xinhua news agency. Zong said on Sunday that the number of commercial outlets operating in the city had risen to 10,625 from 1,400.
Also on Sunday, the central bank said the lower limit on interest rates for mortgages taken out by first-time homebuyers would be lowered in a further effort to revive the slide in home sales.
“Provided the virus situation continues to improve, the economy should begin to rebound this month,” Julian Evans-Pritchard of Capital Economics said in a report. “But the recovery is likely to be lukewarm.”
National Bureau of Statistics (in Chinese): www.stats.gov.cn
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