Covid restrictions on dozens of Chinese cities have upended supply chains in recent months. (file)
Beijing:
China’s prime minister has issued an unusually harsh warning about the world’s second-largest economy, saying it must return to normal as the country’s zero-Covid strategy bites into growth.
China is the last major economy welded to a policy of mass testing and rapid lockdowns to eliminate virus clusters, but tough restrictions have battered businesses.
Restrictions on dozens of cities in recent months – including the manufacturing hubs of Shenzhen and Shanghai as well as Jilin’s breadbasket – have upended supply chains and dragged economic indicators to their lowest levels in nearly two years.
According to a readout by the official Xinhua news agency, in some ways, the challenges are now “more than those hit by the pandemic in 2020”, Premier Li Keqiang said at a State Council meeting on Wednesday.
“We are at a critical juncture in determining the economic trend for the whole year,” Xinhua news agency quoted Li as saying.
“We must seize the time window and try to get the economy back on the normal track.”
Lee’s comments are the latest in a growing chorus of officials and business leaders to strike a greater balance between containing the virus and helping the ailing economy.
China’s retail sales fell 11.1 percent year-on-year in April, while factory output fell 2.9 percent – the worst performance since the early days of the Covid crisis.
And the urban unemployment rate returned to its February 2020 peak, challenging policymakers’ full-year growth target of around 5.5 percent.
In March and especially in April, indicators such as employment, industrial output, electricity consumption and freight traffic fell “significantly”, Li said at the state council meeting.
According to Xinhua, he stressed the importance of coordinating virus control and economic development.
wilting growth
China’s current outbreak – fueled by the highly transmissible Omicron virus variant – in 2020 is the worst since the early days of the pandemic.
Its largest city and business hub Shanghai has been closed almost entirely since April, crushing businesses, while restrictions are creeping in in the capital Beijing.
The government has offered tax relief and a bond drive to help industries, and President Xi Jinping previously called for “all-out” infrastructure to be pushed forward.
But analysts caution that growth will continue to slow until China eases its stringent virus controls.
S&P Global Ratings this month lowered its full-year growth forecast for China to 4.2 percent from 4.9 percent due to the COVID-19 restrictions.
And analysts at Nomura warned in a recent note that “the potential for negative GDP growth in the second quarter is increasing”.
Chinese outlet The Economic Observer reported that an unusually large group of provincial, city and county officials were involved in Wednesday’s state council teleconference.
The economic issues come in a crucial political year for Xi, who is eyeing another term in power at the Communist Party Congress this autumn.
(Except for the title, this story has not been edited by NDTV staff and is published from a syndicated feed.)