China’s economic risks ‘tilted to downside’, coronavirus-induced contraction ‘most severe’ since 2020 outbreak
- Industrial production fell by 2.9 per cent from a year earlier in April, while retail sales fell by 11.1 per cent last month
- Fixed-asset investment rose by 6.8 per cent in the January-April period, while the surveyed jobless rate rose to 6.1 per cent last month
Calls for a fine-tuning of China’s coronavirus policies and increased stimulus have grown louder after headline data showed China’s economy shrank dramatically in April, with analysts warning the decline has yet to bottom out.
Major indicators measuring the state of the world’s second largest economy fell short of expectations in data released on Monday, with industrial production, retail sales, fixed-asset investment and the surveyed jobless rate falling to their weakest levels in more than two years.
“China’s economic activity contracted in April and was the most severe since the first quarter of 2020 during the first wave of the Covid outbreak,” said Tommy Wu, lead China economist at Oxford Economics, who expects a contraction in the second quarter before returning to growth in the second half of the year.
“The risks to the outlook are tilted to the downside, as the effectiveness of policy stimulus will largely depend on the scale of future Covid outbreaks and lockdowns.”
China is battling its worst coronavirus outbreaks in more than two years, with the lockdowns of both Shanghai and Beijing particularly damaging ahead of the Communist Party’s politically crucial 20th national congress in the autumn.