China’s economy faltered ahead of major Covid policy shift, retail sales and unemployment data show

China’s economy faltered ahead of major Covid policy shift, retail sales and unemployment data show

China’s economy faltered ahead of major Covid policy shift, retail sales and unemployment data show

Hong Kong

China’s Covid-hit economy collapsed in November before its leaders abruptly eased pandemic-related restrictions, paving the way for a reopening that economists say will be bumpy and painful.

On Thursday, a number of indicators pointed to a slowdown in economic activity last month. Retail sales fell 5.9% in November from a year ago, according to the National Bureau of Statistics. It was the worst retail spending contraction since May, when widespread Covid lockdowns, even in the country’s wealthiest city, Shanghai, have hit the economy.

Industrial production rose just 2.2% in November, less than half of October’s growth.

Investment in real estate, which accounts for up to 30% of China’s GDP, has plummeted 9.8% in the first 11 months of the year. Property sales by value plummeted more than 26%.

Unemployment has worsened, rising to 5.7% last month, the highest level in six months.

“In November, Covid outbreaks spread across most of the country, forcing residents to cut back on travel and stay at home, which hit consumption hard,” Fu Jiaqi, a statistician at the NBS, said on Thursday. in a statement accompanying the data release.

She noted that consumer activities that involve personal interaction, such as travel or meals, were heavily impacted. Revenue from the restaurant business fell 8.4% last month.

Sales of big-box items, such as cars, furniture and high-end consumer electronics, also fell sharply as consumers were wary of spending due to concerns about a weak economy. Spending on home appliances and telecommunications devices plummeted more than 17%. Auto sales are down more than 4%.

Foreign trade is also weak. Last week, customs data showed the country’s exports fell 8.7% in November compared to a year ago, the worst performance since February 2020. That figure was much lower than most economists expected. .

November’s economic crisis came before Beijing abruptly eased its crackdown on pandemic restrictions earlier this month. Top leaders signaled at a key policy meeting last week that they will refocus on growth and look for an economic turnaround next year.

This year, China’s economy has been hit by its strict zero-Covid policy and persistent real estate woes. Growth is expected to reach around 3% in 2022, one of the lowest levels since 1976, the year the death of former leader Mao Zedong ended a decade of social and economic turmoil.

On Wednesday, two of the country’s top governing bodies, the Central Committee of the Communist Party and the State Council, issued a strategic plan to expand domestic demand and stimulate consumption and investment to 2035. He cited rising external risks, including global economic and geopolitical uncertainties.

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