প্রকাশ: 16/05/2022
China's economic
activity cooled sharply in April as widening Covid-19 lockdowns took a heavy
toll on consumption, industrial production and employment, adding to fears the
economy could shrink in the second quarter.
Full or partial lockdowns were imposed in dozens of cities
in March and April, including a protracted shutdown in commercial centre
Shanghai, keeping workers and shoppers confined to their homes and severely
disrupting supply chains.
Retail sales in April shrank 11.1% from a year earlier, the
biggest contraction since March 2020, data from the National Bureau of
Statistics (NBS) showed on Monday, and worse than forecast.
Dining-out services were suspended in some provinces, which
led to a 22.7% drop in catering revenue in April. China's auto sales plunged
47.6% from a year earlier as car makers slashed production amid empty showrooms
and parts shortages.
As the anti-virus measures snarled supply chains and
paralysed distribution, industrial production fell 2.9% from a year earlier,
below expectations for 0.4% growth. The reading was the largest decline since
February 2020.
In line with the decline in industrial output, China
processed 11% less crude oil in April than a year earlier, with daily
throughput falling to the lowest since March. The country's April power
generation also fell 4.3% from the previous year, the lowest since May 2020.
The shock also weighed on the job market, which Chinese
leaders have prioritised for economic and social stability. The nationwide
survey-based jobless rate rose to 6.1% in April from 5.8%, the highest since
February 2020 when it stood at 6.2%.
The 6.7% jobless rate in 31 major cities in April is the
highest since records started in 2018.
The government aims to keep the jobless rate below 5.5% in
2022.
China wants to create more than 11 million jobs, and
preferably 13 million urban jobs this year, Premier Li Keqiang said in March,
but he recently called the country's employment situation "complicated and
grim" following the worst Covid-19 outbreaks since 2020.
Fixed asset investment, a main driver that Beijing is
counting on to prop up the economy as exports lost momentum, increased 6.8%
year-on-year in the first four months, compared with an expected 7.0% rise.
The extended lockdown in Shanghai and prolonged testing in
Beijing are adding to the concerns about economic growth over the rest of the
year, said Nie Wen, Shanghai-based economist at Hwabao Trust.
"It's still possible to achieve a GDP growth of around
5% this year if Covid curbs are only going to affect the economy in April and
May. But the virus is so infectious, and I remain concerned about growth going
forward."
Hard-to-achieve goal
Analysts say Beijing's official 2022 growth target of around
5.5% is looking harder and harder to achieve as officials maintain draconian
zero-Covid policies. Moreover, the key property market is in a protracted slump
and export growth has slowed to a two-year low.
The economy grew 4.8% in the first quarter.
China's financial authorities said on Sunday they will let banks
cut the lower limit of interest rates on home loans based on the corresponding
tenor of the Loan Prime Rate for first home purchases, a move to support
housing demand and promote healthy development of the country's property
market.
ING analysts are looking for a 1% contraction in economic
growth in the second quarter from a year earlier, while Nomura said the Chinese
economy has been facing a rising risk of recession since mid-March.
Capital Economics is now forecasting full-year Chinese
growth of just 2%, and says if Covid cannot be controlled even that is not
guaranteed.
"Even once the current virus wave is quashed, Covid
controls will continue to hold back activity to some degree over the coming
quarters," it said in a note on Friday.
While policymakers have repeatedly pledged more support for
the slowing economy, stimulus so far has been "underwhelming", with
only small policy rate cuts, it added.
China's central bank rolled over maturing medium-term policy
loans while keeping the interest rate unchanged for a fourth straight month on
Monday.
Nie said authorities would be cautious in rolling out
quantitative measures like large-scale cuts to interest rates or banks' reserve
requirement ratios to spur the economy, given concerns about U.S. interest rate
hikes and a depreciating Chinese currency, but structural and targeted
measures, such as in the property sector, would be preferred.
- Reuters
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