behind the economy

“Zero Covid” threatens to end dependence on China as a locomotive for growth

China is still imposing massive lockdowns.

From the source

Widespread lockdowns imposed across China along with government measures to contain the spread of the coronavirus in the country threaten to continue uncertainty over global supply chains and dampen the growth prospects of the global economy.

Beijing's "battle" to contain the virus, which includes severe restrictions on daily life and commerce in cities from the major port city of Tianjin in the north to Guangzhou in the south, is affecting economies elsewhere in the world, as central banks raise interest rates to beat inflation.

And the “Wall Street Journal” reported that the harsh steps applied on a large scale send a strong signal that the country is not ready for a sustainable reopening after nearly three years of the pandemic, and long after other major economies have ended almost all “Covid” controls.

Beijing's continued zero-tolerance approach to Covid likely means the world cannot count on China to be an engine of growth as the economies of the United States and Europe slow.

Many economists expect the US to slip into recession sometime in the next 12 months.

"If outbreaks worsen in major port cities in China, that would be a major concern," said Glenn Koepke, general manager of Forkits in Chicago.

China imposed new restrictions on daily life and economic activity in cities including Beijing, Guangzhou and Tianjin.

Shijiazhuang, a city of 11 million people southwest of the capital, tried to loosen some control measures, only to get off track within days after the number of cases soared, and Shanghai also tightened restrictions on visitors.

Economists said the impact of the restrictions, as authorities tightened controls, was seen in fewer subway riders and fewer car trips.

Previous closures have already closed restaurants, hurting local tourism and curtailing factory output.

Some economists lowered their growth forecasts. Chief economist at Nomura Bank in Hong Kong, Ting Lu, expected the Chinese economy to contract by 0.3% in the fourth quarter compared to the third quarter, while lowering his full-year growth forecast to 2.8% from 2.9%.

Economists stated that the strength of any recovery in the coming year will depend on China finding a practical way out of the “zero Covid” policy.

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