According to the results of a survey conducted by AFP of economic specialists, China’s economic growth slowed to levels not seen since the beginning of the year 2020 in the second quarter. This was primarily the result of severe Covid lockdowns and ongoing deterioration in the real estate industry.
But the aftermath has sapped growth and is pushing officials’ annual objective of around 5.5 percent further and further out of reach. The fallout has sapped growth and is pushing policymakers’ annual target of about 5.5 percent further and further out of reach.
The delay is the result of the country’s largest city, Shanghai, being quarantined for two months due to a return of a virus, which disrupted supply lines and caused industries to close, while dozens of other cities struggled with stricter regulations to combat local breakouts of the illness.
An AFP survey of specialists from 12 different financial institutions found that over the period of April-June, the nation’s gross domestic product is expected to have grown by 1.6 percent on an annual basis.
Several economists anticipate that the economy will contract on a quarterly basis for the first time since the height of the epidemic in the year 2020.
According to major measures, activity in both the services sector and the industrial sector decreased during the months of April and May, said Teeuwe Mevissen, a senior macro analyst at Rabobank.
According to what he told AFP, China’s housing market, which is a crucial economic engine, was also “still in uncertainty,” while lockdowns had a devastating impact on both supply and demand.
According to the statistics provided by China Real Estate Information Corporation, new house sales for the top 100 developers were down by 43 percent on an annual basis in the month of June. Analysts from Nomura said that metro passenger journeys in key cities remained below 2021 levels throughout this time.
Only once in the last several decades has China seen a decrease in its GDP, and economists anticipate that the most recent data will drop full-year growth to about four percent, reducing prior predictions in the process.
Since a long time ago, economists have cast doubt on the reliability of official Chinese statistics, harbouring the suspicion that the numbers are manipulated for political purposes.
And the formal announcement that will be made on Friday will be widely monitored as the Communist Party prepares for its 20th Congress, at which Xi Jinping is anticipated to be awarded another term as president lasting five years.
In a recent article, the economist Larry Hu from Macquarie indicated that the Chinese government’s leaders desire both zero-Covid and growth. This goal was made explicit during a meeting of the Politburo in April.
The authorities have promised to make efforts to fulfil this year’s aim, which was a goal that was restated by Xi in the previous month, and Hu indicated that the leaders would likely “decide whether to almost double down or back down” in July.
“From a rhetorical standpoint, officials are not likely to abandon the term ‘zero-Covid’ in the near future. Having said that, they might still redefine ‘zero-Covid,’ which would make it less damaging to the economy, he noted.
Premier Li Keqiang said on the previous Thursday that the foundations for China’s economic recovery are “still fragile,” and he asked for further effort to be done to stabilise the economy.
According to a research published by ANZ Research, there are also “many uncertainties” surrounding the most recent comeback.
“a downturn in the economy of the United States and the Federal Reserve’s raising steps may cloud the outlook for China’s exports,” ANZ stated, noting that unanticipated COVID outbreaks, which might lead to more limitations on movement, further obscure the picture.
Official statistics released on Saturday indicated that consumer inflation reached its highest level in the United States in June in two years as the price of pork skyrocketed. This poses a danger to the country’s relative stability as a result of a worldwide increase in food costs.
According to the head economist at Oxford Economics, China’s economy has begun to recover after the limitations imposed during the lockdown in Shanghai began to be eased on June 1.
Nevertheless, “pressure on consumption will undoubtedly endure,” he noted, even in the event that subsequent outbreaks are less disruptive as a result of authorities refining their measures.
This week, a car industry organisation reduced its sales prediction for the year 2022 as a result of declining demand.
“Consumer sentiment is unlikely to turn optimistic as strict mobility restrictions will be imposed even when the number of Covid cases in a small neighbourhood is very low,” Wu added. “This is because strict mobility restrictions will be imposed even when the number of Covid cases in a small neighbourhood is very low.”