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Lockdowns in metropolises: China’s economy is suffering from the zero-Covid strategy

Lockdowns in metropolises: China’s economy is suffering from the zero-Covid strategy
Written by insideindyhomes

DThe strict restrictions imposed by China’s zero-Covid strategy are slowing down the second-largest economy more than expected. Industrial production surprisingly fell by 2.9 percent in April compared to the same period last year, as reported by the statistics office in Beijing on Monday. Retail sales also fell more sharply than analysts had predicted, by as much as 11.1 percent.

According to experts, the figures indicate that the downturn this year will be stronger than expected. “Data for April activity has exposed the damage from lockdowns in Shanghai and other parts of the country,” Chang Shu and Eric Zhu wrote in an analysis by financial agency Bloomberg. “The impact is much broader and deeper than anticipated.”

The arrival of the fast-spreading omicron variant puts China’s strict zero-Covid strategy to the test. Tens of millions of people in metropolises such as Shanghai, Changchun or Jilin Province have been in lockdown for weeks and are not allowed to leave their homes. Numerous neighborhoods in Beijing are cordoned off. Most shops and many subway stations are closed. Millions have to work from home.

Delivery bottlenecks also hit Germany

The restrictions have seen a significant drop in freight traffic across the country. Supply chains are broken. Many companies had to stop or shut down production. Container transport via the world’s largest port in Shanghai has plummeted. The delivery bottlenecks will also be felt in Germany through higher prices, as experts predict. German and other European or foreign companies operating in China are also severely affected.

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Unemployment has also risen sharply in the past month and has almost reached a record high. The unemployment rate was 6.1 percent in April, the National Statistics Office in Beijing announced on Monday. This is just below the historic record of 6.2 percent set in February 2020 during the onset of the pandemic.

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