Economic Impact of China's "Zero-COVID" Policy

New anti-pandemic restrictions imposed by Chinese government in response to the recent COVID outbreak has brought business activity to a halt in Shanghai, China’s largest city, as well as swaths of Beijing and dozens of smaller municipalities, mostly in the east of the country.

• Given the relatively weak data for the first quarter of 2022, China’s economic growth target of 5.5% for this year, which is the lowest target in three decades, looks increasingly ambitious. Trying to halt the decline, Chinese government announced 33 new policy initiatives including reverting to traditional stimulus measures such as spending on large-scale infrastructure projects, offering tax breaks and easing restrictions on banks to increase lending.
• China’s recent university graduates are struggling to find work. Faltering growth has accelerated youth unemployment, which in urban areas has jumped from 14 per cent late last year to 18 per cent in April and May 2022.
• "Zero-COVID" policy has a significant negative impact on China’s property market, which usually accounts for almost a third of the economy. China’s home sales are falling at a faster pace than early 2020.
• Lockdown in Shanghai, the world largest sea port, has disrupted container shipments and led to deceleration of China's forming trade flows.
• Chinese stock market tumbled in late April on fears COVID restrictions in China could hit supply chains and the global economy. Chinese Yuan has depreciated by 6%.