The far-ranging impact of lockdowns in China has put a damper on the country’s economy, according to The Wall Street Journal (subscription).
- China’s largest city, Shanghai, has been in lockdown for several weeks. Strict isolation requirements in cities across China have hampered the country’s supply chains and production levels.
- China’s year-over-year retail sales fell 11.1% in April, a decline almost as sharp as at the beginning of the pandemic.
The response: “While there has been plenty of discussion of the need to shore up the economy at the top echelons of government, the reality is that, so far, the actual policy response has been extremely underwhelming.”
- The absence of a true economic policy response suggests that the Chinese government believes it can control COVID-19 outbreaks, or believes that aggressive stimulus measures would not be beneficial for China’s economic recovery, according to the Journal.
What’s next: A steep downturn for the Chinese economy is expected this quarter, and experts are predicting an extended period of subpar economic growth. Analysts at Citibank and S&P Global recently downgraded full-year 2022 Chinese growth forecasts to about 4%.