China: economic situation worse than at the start of the pandemic, admits the Prime Minister

Faced with a resurgence of the epidemic for several months, China is applying a zero Covid strategy, which intends to limit the number of deaths as much as possible thanks in particular to confinements – in particular that of Shanghai since the beginning of April.

Firmly defended by President Xi Jinping, this health policy has serious repercussions on the economy, with many businesses closed, factories operating at idle and production chains very disrupted.

“Since March and even more so since April, economic indicators on employment, industrial production, electricity consumption and freight transportation have seen a marked decline,” Li Keqiang said in a conference call Wednesday with officials. thousands of local officials.

"The difficulties are, in some respects and to some extent, even greater than in 2020 when the epidemic was hitting hard" the country, he stressed, according to an account by the official news agency. New China.

In May, China unveiled its worst economic performance for two years, with consumption at its lowest and unemployment close to an all-time high.

"We are now at a critical moment, which will determine the economic trend for the whole year. We must seize this window of opportunity to bring the economy back on track," Li Keqiang said on Wednesday.

The economic slowdown jeopardizes Beijing's growth target of around 5.5%, in a politically sensitive year that should see Xi Jinping reappointed as head of the Chinese Communist Party (CCP) in the fall.

However, the party draws its main legitimacy from the continuous increase in the purchasing power of the population.

"Li Keqiang may have just prepared the ground for abandoning this year's growth target," said Trivium China, a firm specializing in Chinese economic policy, in a note on Thursday.

If containment seems to be easing somewhat in Shanghai, its 25 million inhabitants remain subject to strict restrictions.

For its part, the city of Beijing is strengthening its anti-Covid measures, with many shops and tourist sites closed or operating at idle.

© 2022 AFP