China’s unemployment rate has peaked since May 2020. Retail sales are down. Millions of people are confined to their homes due to the “zero tolerance” strategy designed to contain the pandemic.
The situation in the Middle Kingdom seems more favorable in terms of GDP growth. The Chinese economy grew stronger than economists had expected. And this despite the fact that a sharp increase in the number of coronavirus infections has forced local authorities to impose closures in many large cities, including Shanghai, which is the financial, manufacturing and shipping center of the Middle Kingdom.
Gross domestic product grew 4.8% in the first quarter. every year. Although the data surprised analysts positively, the economy continued to grow below the target level of 5.5%.
Corona virus in China. Zero-tolerance policy affects the economy
The retail sales data was much worse. This decreased in March by 3.5 percent. on an annual basis. This is the first drop in this indicator since July 2020. In the same period, the unemployment rate rose to 5.8%, the highest level since May 2020.
The latest data points to the risk of a sharp slowdown in the second global economy. Nor will the Middle Kingdom remain immune to the economic turmoil resulting from the Russian invasion of Ukraine.
On Friday, China’s Ministry of Industry and Information Technology said it would help restart operations of more than 600 companies in Shanghai. These are companies from the technology, automotive and medical industries. Some factories, including Pegatron, a major iPhone maker, have halted all operations in Shanghai.
Hueawei manager Richard Yu warned last week that supply chains in the tech, industrial and auto sectors would be “totally cut” if Shanghai does not lift restrictions next month.
Most of Shanghai’s 25 million residents have stayed home for a third week as China continues to use a “zero tolerance” strategy to contain the epidemic, and demands that anyone who may be infected be isolated.
China said on Monday that 23,362 people have tested positive for the virus in the past 24 hours, most of whom have not had any symptoms and nearly all of them live in Shanghai.
Main image source: PAP / EPA / MARK R. CRISTINO
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