As China strikes positive tone on economy, experts play down short-term impact of policy support

Name: Shanghai plans to start lifting months-long lockdown in June
Uploaded: 2022-05-18T10:00:18.000Z
Duration: 1 min 48 s
Description: Shanghai plans to start lifting months-long lockdown in June

Propaganda machine is churning out pro-growth statements and defending coronavirus-control measures, but some say greater policy support is needed

Others suggest that official data may overstate the strength of China’s economy ahead of the party congress and leadership reshuffle later this year

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Nearly two months after Shanghai was placed under lockdown, party mouthpiece People’s Daily says the nation’s zero-Covid policy is gradually having “the desired effects”. Photo: Reuters

Amanda Lee

Published: 6:00pm, 18 May 2022Updated: 8:57pm, 18 May 2022

While Chinese officials and state media are playing up the nation’s economic prospects, many analysts remain sceptical about seeing any significant improvements in the short term, even as Shanghai is looking to gradually ease a lockdown that has gripped the financial hub since March.

Nearly two months into the lockdown of Shanghai, with a population of 25 million people, health authorities there announced a “phased” plan on Monday to broadly reopen and allow normal life to resume next month.

In an article on Wednesday, party mouthpiece People’s Daily cited an official with the state planner – the National Development and Reform Commission (NDRC) – as saying that the economy will return to normal “soon”, as the country’s “efficient Covid-19 control measures and pro-growth policies gradually produce the intended effects”.

It also highlighted comments by NDRC spokeswoman Meng Wei, who said the government would “make every effort” to expand domestic demand, press ahead with a number of major investment projects to drive growth, and lift market confidence while restoring production.

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Shanghai plans to start lifting months-long lockdown in June

The article ran after Vice-Premier Liu He said on Tuesday that the government would support the private economy, as well as the development of digital economy companies and their public listings. His comments, at a meeting with tech executives, buoyed hopes that a regulatory crackdown on the sector might be easing.

The unprecedented crackdown on internet companies, which began in late 2020, has pummelled Chinese tech companies and roiled markets, erasing billions of dollars worth of market value and weighing heavily on an important growth driver.

The surprise contraction of China’s economy in April has further hit the already fragile market sentiment on the recovery, while some economists have called for more impactful policy support.

Rory Green, head of China and Asia research at London-based research firm TS Lombard, said China’s gross domestic product (GDP) growth will fall short of Beijing’s target of “around 5.5 per cent” this year due to Beijing’s zero-Covid policy, which mandates lockdowns, mass testing and quarantines.

Official data may overstate the strength of the economy ahead of the party congress

Rory Green, TS Lombard