The outbreak of the COVID-19 pandemic exerted downward pressure on the Chinese economy. The strict lockdown policy in China slowed down the economy and took retail sales and industrial production to their lowest levels since the outbreak of the pandemic in early 2020.
Impact of COVID-19 on China’s Economy
According to official data released by the National Bureau of Statistics of China, the country’s industrial production growth, which measures activity in the manufacturing, mining, and utility sectors, fell to a negative 2.9% in April 2022 from 5% in March 2022.
The COVID-19 restrictions had a major impact on China’s consumer spending as retail sales in April 2022 decreased 11.1% year on year. The consumption decreased considerably, with millions of people confined to their homes because of the lockdown. The job market in China also suffered, as the unemployment rate climbed to 6.1% in April 2022 from 5.8% in March 2022, the highest level since February 2020. The unemployment rate among young adults aged 16–24 reached an alarming 18.2% in April 2022.
China’s stock market index, the Shanghai Composite, which is widely considered the benchmark for the performance of the Chinese stock market, plunged 17.5% between the beginning of January 2022 and early May 2022.
Major Sectors Affected
The manufacturing sector suffered the most as the accumulated growth rate decreased to 3.2% in April 2022 from 7.3% in February 2022. The sharp decline was due to crippled output and supply chain disruption caused by the zero-COVID policy in many cities in China.
Impact on Global Economy
The lockdown in China is affecting the global economy as well. The country’s zero-COVID policy disrupted the global supply chain and affected demand and supply as China is a manufacturing hub for industries ranging from big tech to consumer goods. Recently, Apple reported that the shutdowns affected iPhone production by 20% to 30%. Tesla also faced unprecedented costs due to production hurdles.
Measures Taken by China to Lessen COVID-19 Impact
To lessen the impact of the COVID-19 pandemic on the economy, China reduced its benchmark reference rate for mortgages by 15 basis points to 4.45% in May 2022, the biggest drop since China reformed the interest rate structure in 2019. Real estate and related businesses account for 25% of China's GDP, and the reduction in the reference rate could provide relief to the Chinese economy. According to the National Bureau of Statistics of China, “the impact of COVID is temporary and the economy is expected to stabilize and recover.”
Don’t wait - discover a universe of connected data & insights with your next search. Browse over 28M data points across 22 industries.
Access more premium companies when you subscribe to Explorer
Contact the team or request a demo to find out how our data can drive your business forward