Parts of China have been in a strict lockdown for the most part for two months now: 26 million people are locked in their homes in Shanghai. Videos of starving residents screaming for help from their windows, inhumane quarantine facilities and beating city officials went around the world. None of this, however, persuaded the Chinese communist state party, the CCP, to turn back. Now the economy is also collapsing.
Chinese industrial production surprisingly fell by 2.9 percent in April compared to the same period last year, the statistics office reported in Beijing on Monday. Retail sales also fell more sharply than analysts had predicted by 11.1 percent. At 6.1 percent, the unemployment rate remained just below the historic high in February 2020 (6.2 percent). Analysts had actually expected growth in industrial production of 0.4 percent. In terms of retail sales, they had only expected half of the current decline.
According to experts, the figures indicate that the downturn this year will be stronger than expected. “Data for April activity has exposed the damage from lockdowns in Shanghai and other parts of the country,” Chang Shu and Eric Zhu wrote in an analysis by financial agency Bloomberg. “The impact is much broader and deeper than anticipated.” The restrictions have seen a significant drop in freight traffic across the country. Supply chains are broken. Many companies had to stop or shut down production. Container transport via the world’s largest port in Shanghai has plummeted.
Daily mass testing and strict quarantine regulations are contributing to the paralyzed Chinese economy.
Investors are also leaving the Chinese People’s Republic in droves. The reason is a cocktail of political and economic risks. Additionally, rising interest rates elsewhere are making the world’s second largest economy a less attractive place to hold money.
