Coronavirus: Beijing outbreak ramps up pressure on China’s economic momentum

Name: Residents locked inside homes with wires and bolts due to Covid-19
Uploaded: 2022-05-03T22:15:13.000Z
Duration: 1 min 27 s
Description: Residents locked inside homes with wires and bolts due to Covid-19

Beijing’s rush to contain an outbreak with mass testing and tough restrictions is putting further strain on China’s economic growth momentum

Activity in both China’s manufacturing and services sectors fell to its lowest point in more than two years last month, data released on Saturday showed

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Workers wearing face masks sell food outside a restaurant, after the government banned dine-in services in Beijing. Photo: Reuters

Amanda Lee

Published: 6:15am, 4 May 2022Updated: 8:35pm, 4 May 2022

China’s economy is expected to take a further hit as authorities in Beijing rush to contain a coronavirus outbreak with mass testing and tough restrictions that have left streets and shops empty in the capital during the five-day Labour Day holiday.

Activity in both China’s manufacturing and services sectors fell to its lowest point in more than two years last month, data released on Saturday showed, in the latest sign that the government’s hardline zero-Covid policy is wreaking significant damage to the world’s second biggest economy.

China is battling its biggest virus surge since the initial Wuhan outbreak in 2020 and numerous cities have responded with travel restrictions and lockdowns. Beijing has started testing nearly all of its 20 million residents for Covid-19, banned restaurant dining and closed theme parks and museums.

“We are of the view that the ongoing pandemic remains the major headwind as balancing Covid-19 suppression weighs on China’s growth momentum due to the stoppages of consumption and production,” said Banny Lam, head of research at CEB International, on Tuesday.

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Residents locked inside homes with wires and bolts due to Covid-19

China’s official non-manufacturing purchasing managers’ index (PMI), which measures business sentiment in the services and construction sectors, dropped to 41.9 in April from 48.4 in March. This represented the lowest reading since February 2020 and the second lowest on record.

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