Balancing growth and virus control a major domestic challenge
- Faced with China’s weakest economic data in more than two years, the fine tuning of policies is aimed at sustaining growth and stability while sticking with the aim of dynamic zero-Covid. How effective this will be remains to be seen
The bad numbers were not unexpected. Lockdowns, especially in Shanghai, have hindered production and mobility across the country. The impact on the national economy is huge. With exports and domestic consumption severely affected by lockdowns, the remaining principal growth engine is government infrastructure investment, which is limited by worries about inflation.
There has been less emphasis on “common prosperity”, President Xi Jinping’s strategy for fairer sharing of the mainland’s new wealth, which has been linked to regulatory crackdowns on booming property and tech sectors. The focus now is more on making a bigger cake before ensuring it is sliced more fairly. Likewise with carbon emissions reduction, where more flexibility could avoid a repeat of last year’s power cuts.
Fine tuning of policies is aimed at sustaining growth and stability. How effective it is remains to be seen. People’s confidence has taken a battering. It will not be very easily restored. In the face of continued economic disruption and mounting public impatience and frustration, some analysts also expect the authorities to ease anti-Covid measures incrementally while adhering to the dynamic zero policy.