China's retail sales lowest in two years from Covid damage
BEIJING, May 16, 2022 (BSS/AFP) - China's retail sales slumped to its
lowest in two years while factory output plunged, official data showed
Monday, capturing the dismal economic fallout from Beijing's zero-Covid
The world's second-largest economy has persisted with strict virus
measures, choking up global supply chains as dozens of Chinese cities --
including key business hub Shanghai -- grapple with restrictions.
Officials have vowed to support growth, lowering the mortgage rate for
first-time homebuyers. While Shanghai's gradual reopening was announced over
the weekend, observers warn that the zero-Covid strategy could mute any
The latest cut came Monday when the National Bureau of Statistics (NBS)
announced data showing that retail sales shrank 11.1 percent on-year in
It is the biggest slump since March 2020 as Chinese consumers remained
cooped up at home or jittery over lingering restrictions.
"In April, the epidemic had a big impact on economic operations," NBS
spokesman Fu Linghui told reporters Monday, adding that the outbreak had a
"significantly larger-than-expected" effect.
But he stressed that the hit would be "short-term" and a gradual recovery
was on the cards.
Industrial production growth also sank 2.9 percent on-year, reflecting
damage from shuttered factories and transportation woes as officials ramped
up Covid restrictions last month.
This figure is the weakest since early 2020, and down from 5.0 percent
growth in March.
The dismal showing came as China battles its worst Covid outbreak since the
early days of the pandemic.
"The prolonged Shanghai lockdown and its ripple effect through China, as
well as logistics delays resulting from highway controls... have severely
affected domestic supply chains," said Tommy Wu, lead China economist at
He added that household consumption was "hit even harder" and disruption to
activity could extend into June with a rebound likely to take weeks.
- Unemployment rise -
In April, unemployment similarly rose to levels not seen since early 2020,
according to the data, as the urban unemployment rate hit 6.1 percent.
In a sign of looming concern among authorities, China on Friday announced
measures to help young people find jobs -- given that a record number of
fresh graduates are expected to enter the market this year.
These include social insurance subsidies for smaller firms that hire more
State-owned enterprises are also expected to boost recruitment, official
Xinhua news agency said.
"Repeated indications from the authorities that meaningful policy easing is
on the horizon have not played out," said financial services firm Gavekal in
a recent note, adding that policymakers may be waiting for lockdowns to lift
before boosting stimulus.
"Yet as Shanghai and Beijing struggle to reopen and the economic damage
keeps growing... officials may yet be forced to crank up stimulus sooner,"