Breaking News
Get Actionable Insights with InvestingPro+: Start 7 Day FREE Trial Register here
Investing Pro 0
Ad-Free Version. Upgrade your Investing.com experience. Save up to 40% More details

Chinese Economic Data Disappoints as Lockdown Impact Continues

Economic Indicators May 16, 2022 01:52AM ET
Saved. See Saved Items.
This article has already been saved in your Saved Items
 
© Reuters.

By Gina Lee

Investing.com – Chinese economic activity dropped sharply in April 2022, as COVID-19 lockdowns took a heavy toll on consumption, industrial production, and employment, adding to fears that the economy could shrink in the second quarter.

National Bureau of Statistics (NBS) data released earlier in the day showed that fixed asset investment grew 6.8% year-on-year. Industrial production contracted 2.9% year-on-year and Chinese industrial production grew 4% year-on-year.

Retail sales contracted 11.1% year-on-year in April 2022 and the Chinese unemployment rate was 6.1%.

Although Premier Li Keqiang said in March that China aims to create more than 11 million jobs, and preferably 13 million urban jobs, in 2022, he recently called the country's employment situation "complicated and grim" due to the country’s worst COVID-19 outbreaks since 2020.

This led to full or partial lockdowns in dozens of cities in March and April, including a prolonged one in the city of Shanghai. This lockdown, and prolonged testing in Beijing, are adding to the concerns about economic growth over the rest of the year, Hwabao Trust economist Nie Wen told Reuters.

"It's still possible to achieve a GDP growth of around 5% this year if COVID curbs are only going to affect the economy in April and May. But the virus is so infectious, and I remain concerned about growth going forward."

Other investors are not convinced, with ING analysts looking for a 1% contraction in economic growth in the second quarter from a year earlier and Nomura saying the Chinese economy has been facing a rising risk of recession since mid-March.

Capital Economics is now forecasting full-year Chinese growth of just 2% and says if COVID-19 cannot be controlled even that is not guaranteed. "Even once the current virus wave is quashed, COVID-19 controls will continue to hold back activity to some degree over the coming quarters.”

While policymakers have repeatedly pledged more support for the slowing economy, stimulus so far has been "underwhelming", with only small policy rate cuts, it added.

Financial authorities also said on Sunday they will let banks cut the lower limit of interest rates on home loans based on the corresponding tenor of the Loan Prime Rate for first home purchases. The People’s Bank of China rolled over maturing medium-term policy loans while keeping the interest rate unchanged for a fourth consecutive month earlier in the day.

Authorities will be cautious in rolling out quantitative measures such as large-scale cuts to interest rates or banks' reserve requirement ratios to spur the economy, given concerns about U.S. interest rate hikes and a depreciating Chinese currency, but structural and targeted measures, such as in the property sector, would be preferred, said Hwabao Trust’s Nie.

 
Chinese Economic Data Disappoints as Lockdown Impact Continues
 

Related Articles

Brazil posts trade surplus of $8.8 billion in June
Brazil posts trade surplus of $8.8 billion in June By Reuters - Jul 01, 2022 1

BRASILIA (Reuters) - Brazil's trade surplus reached $8.814 in June, official figures showed on Friday, below market expectations. Economists polled by Reuters had projected a...

Factory data dampen global hopes for 'soft landing'
Factory data dampen global hopes for 'soft landing' By Reuters - Jul 01, 2022 6

By Jonathan Cable and Leika Kihara LONDON/TOKYO/WASHINGTON (Reuters) - Global manufacturing struggled in June as higher prices and a darker economic outlook left consumers wary of...

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with other users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind:  

  •            Enrich the conversation, don’t trash it.

  •           Stay focused and on track. Only post material that’s relevant to the topic being discussed. 

  •           Be respectful. Even negative opinions can be framed positively and diplomatically. Avoid profanity, slander or personal attacks directed at an author or another user. Racism, sexism and other forms of discrimination will not be tolerated.

  • Use standard writing style. Include punctuation and upper and lower cases. Comments that are written in all caps and contain excessive use of symbols will be removed.
  • NOTE: Spam and/or promotional messages and comments containing links will be removed. Phone numbers, email addresses, links to personal or business websites, Skype/Telegram/WhatsApp etc. addresses (including links to groups) will also be removed; self-promotional material or business-related solicitations or PR (ie, contact me for signals/advice etc.), and/or any other comment that contains personal contact specifcs or advertising will be removed as well. In addition, any of the above-mentioned violations may result in suspension of your account.
  • Doxxing. We do not allow any sharing of private or personal contact or other information about any individual or organization. This will result in immediate suspension of the commentor and his or her account.
  • Don’t monopolize the conversation. We appreciate passion and conviction, but we also strongly believe in giving everyone a chance to air their point of view. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.

Write your thoughts here
 
Are you sure you want to delete this chart?
 
Post
Post also to:
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
 
Are you sure you want to delete this chart?
 
Post
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Continue with Google
or
Sign up with Email