However, the view has deteriorated in view of the publication by the National Bureau of Statistics on April 18 of its estimates for the increase in gross domestic product in the first quarter. Meanwhile, Xi’s government is battling a Covid-19 nightmare that has gripped some of the country’s largest cities last month. Monday’s statistics release will record just a small sample of the turmoil resulting from the lockdown in Shanghai, China’s most populous city and its most important economic and construction center, which did not become a complete crisis until the end of March. Previously, large-scale disruptions focused on the northern city of Xi’an, which saw an increase in cases in January, and more recently in Jilin Province, a major agricultural production and car hub. The negative effects of the lockdown in Shanghai were much greater than those in either Xi’an or Jilin, so no matter how bad the first quarter numbers are, they are likely to only get worse in the coming months. Here are five things to look for when selecting yours.
How realistic is the government’s official target of 5.5 percent annual growth?
When Prime Minister Li Keqiang announced his 5.5 percent target at the start of China’s annual parliamentary session on March 5, he seemed aggressive to most analysts, especially in light of his repeated promises not to resort to “flood motives” while also “Will maintain the [national] the macroeconomic leverage ratio is generally stable “. China’s economic output grew by 4 percent year on year in the last three months of 2021, from 4.9 percent in the previous quarter. Deputy Prime Minister Liu He, Xi’s most trusted financial adviser, has jeopardized his reputation for maintaining discipline and not letting debt levels soar as they did during an oversupply of Beijing. global financial crisis of 2008-09. But both Li and Liu are now clearly concerned about the health of the economy. Liu made a rare move in March to boost confidence in the economy and stock markets, which had been shaken by a combination of Covid lockdowns and the inflationary effects of Russia’s invasion of Ukraine. Deputy Prime Minister Liu He © Andrew Harrer / Bloomberg
Will Covid Zero Policy Overcome Concerns About the Economy?
The success of China’s Zero Covid approach to pandemic management in 2020 and 2021 has become a central part of Xi’s political legacy and an excuse for his third term as party, state and military leader. Xi has repeatedly said that local officials should achieve zero Covid while ensuring minimal disruption to the economy and people’s lives. Shanghai initially tried to achieve this by closing one half of its population for five days, followed by five days for the other half. But the compromise approach could not address the transmissibility of the Omicron variant. As the daily number of cases in Shanghai exceeded 20,000, a de facto lockdown ensued throughout the city with no clear exit strategy. Other cities with negligible daily cases now resort to precautionary restrictions and all lockdowns. Ernan Cui of Gavekal Dragonomics, a consulting firm in Beijing, estimates that nearly three-quarters of China’s 100 largest cities, which account for more than half of national GDP, impose restrictions on Covid. Excluding a clear message from Xi that the zeal of zero Covid has gone too far, the economy will continue to bear the brunt of its consequences. On Wednesday, Xi reiterated that there would be no significant easing of the policy.
How big a blow to consumption?
Lockdowns make it difficult for people to go out and buy consumer goods, cars and even apartments, with predictable consequences for the economy. Car sales suffered before Shanghai announced the partial lockdown on March 26 and ended the month nearly 12 percent down year on year. The prospects for a recovery in April are not favorable given the constraints in Shanghai and Jilin, both major automakers. Real estate sales also remained stagnant ahead of China’s lockdowns in March. New home prices fell slightly in February from January, despite measures taken by local governments across the country to boost sales, as well as China’s first benchmark mortgage rate cut since 2020.
Will the government resort to covert stimulus measures to stimulate the economy?
Total social funding, a broad measure of credit to the Chinese economy, rose 38 percent year-on-year in March to Rs 4.65 trillion ($ 730 billion), compared with previous expectations of an 8 percent increase. It was a repeat of March 2020, when shortly after the pandemic broke out in central China, total social funding reached 5.18 tn Rmb. Chinese banks also issued loans totaling RM 3.1 trillion in March, about 2.5 times the amount in February.
Is the patience of foreign investors approaching a tipping point?
This week, Jörg Wuttke, head of the European Chamber of Commerce in China, warned that repeated cases and the authorities’ harsh response “erode the confidence of foreign investors in the Chinese market”. According to a recent survey of German investors in China, half of those surveyed said their supply chains had been “completely disrupted or severely affected”, while a third said their manufacturing activities had been similarly affected. “The Omicron variant,” Wuttke said, “poses new challenges that seemingly cannot be overcome by the old toolbox of mass testing and isolation.”
