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    China’s Zero Corona Strategy Hurts Private Consumption More Than Manufacturing

    Residents are lined up for a large number of Covid-19 tests in Tianjin on January 9, 2022, after the municipality reports 20 news incidents over the weekend.

    Featured China | Future Publishing | Getty Images

    Beijing — China’s Zero-COVID policy to control a pandemic affects consumers more than factories, economists say.

    Analysts are cautious about the Chinese economy as local governments impose more travel bans and some blockades to contain variants of Omicroncovid. Goldman Sachs Reduces Growth Forecast Tuesday year.

    But the analyst Private consumption in China is already sluggish.

    Nomura’s chief China economist, Tin Lu, said in a report on Monday that Omicron’s high transmission rate means that while the cost of China’s Zero-COVID policy is rising, profits are declining. He said the hospitality industry has not yet recovered to pre-pandemic levels, and industry workers may have run out of savings and reduced spending.

    The cost list did not include manufacturing.

    On the positive side, “Beijing’s ability to mobilize all the country’s resources, in addition to the Zero Corona strategy, will undoubtedly bring great benefits to the people and the economy, with official deaths since mid-April 2020. With only 4 people, the factory is firing all cylinders, and an impressive 31.0% [year-on-year] Export growth in the first 11 months of the year. “

    Since the pandemic began in early 2020, China’s policies have used quarantine and travel bans to curb outbreaks, whether in cities or with other countries. After the contraction in the first quarter, the country became the only major economy to grow that year.

    According to an analysis by Dan Wan, Shanghai-based Chief Economist in Hansen China, the biggest impact of the Zero-COVID policy was on hotels and restaurants. According to her research, manufacturing and agriculture are the least affected and contribute the most to growth.

    Wang’s analysis compared GDP figures for 2020 and 2021 with the four-year average of China’s annual GDP growth from 2016 to 2019 before the pandemic.

    “By containing the Covid Spread, China [has] We were able to confirm that all the nodes along the supply chain worked and that in fact both agricultural and industrial production were above trend values. “

    Industrial production increased by 2.8% in 2020 and increased by 10.1% in the first 11 months of 2021 from the same period last year. Factory activity in China increased unexpectedly in December. According to an official index called Purchasing Manager’s Index.

    Reasons why the influence of the factory is small

    Su expects economic performance to change from state to state this year due to different municipal approaches to implementing the Zero-COVID policy.

    “In Shanghai, for example, if there are positive cases, they just blockade the district or street,” she said. “But for governments with limited medical resources[s]They tend to blockade the entire city soon, as it happened in Xi’An. “

    Xian in central China One of the many industrial hubs in the country. The blockade of a city of 13 million people after late December predicts that city chief China economist Li-Gang Liu could reduce industrial production in December from 3.8% in November to 3.5%. Contributed.

    But Liu expects China’s trade growth to remain “steady,” despite its high base over the past two years.

    More than half of China’s goods manufactured for export are from Guangdong, Jiangsu and Zhejiang provinces on the south or southeast coast near Shanghai. The developing region is in the Midwest of China, a country with a population of 1.4 billion.

    China’s export growth remained resilient throughout 2021. Despite multiple warnings that demand from abroad will slow.

    This time there is a risk. Factories in other countries may be operational if the government decides to pursue a coexistence strategy with Covid.

    China’s “Zero Corona Policy, on the one hand, can ensure retail activity and industrial activity can continue, but the world [the] “China could jeopardize the growth gap between the two,” said Gary Ng, an economist in Natixis’ Asia-Pacific region.

    Political risk

    Read more about China from CNBC Pro

    The Omicroncovid variant, which emerged in late November, is a highly mutated version of the highly infectious coronavirus.

    Early reports indicate that Omicron may not be as deadly as other Covid strains.But the World Health Organization said on Tuesday: Omicron can cause life-threatening illnesses in unvaccinated elderly people and people with underlying illnesses.

    Mainland China reported 124 new, locally infected cases on Wednesday, with a total of 3,460 existing cases and no new deaths. The number of new cases in Xi’An has decreased from 63 cases a week ago to 6 cases. In the United States The average number of deaths from Covid is 1,700 per day. According to Reuters, hospitalizations reached a record 132,646 as of Monday.

    China’s Zero Corona Strategy Hurts Private Consumption More Than Manufacturing

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    The post China’s Zero Corona Strategy Hurts Private Consumption More Than Manufacturing appeared first on Eminetra.

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