COVID Surge Slows Chinese Economy

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Rising cases are keeping holiday shoppers out of stores.

Earlier this month, after a series of fierce and lengthy protests by Chinese citizens, Beijing officially moved to begin easing their extensive “zero-COVID” policies. As lockdown procedures have eased, however, COVID cases have begun to tick upward, and in a mirror of 2020’s global retail slowing, citizens are forgoing shopping in the interest of safety.

“The number of people on the streets has dropped off sharply from already subdued levels across the country,” Capital Economics analysts said in a research note last week. “That will be affecting demand.”

Whether individuals are getting sick or not, the rising cases are affected multiple layers of the Chinese economy. Shoppers are staying out of retail locations and public restaurants in the interest of their health, while factories and production companies are slowing as workers get sick. Car and home sales are down, and even shipping industries have seen their businesses dwindle as stores can’t offload their existing stock.

“The COVID outbreak has severely impacted our production,” Lian Yubo, vice president of electric vehicle manufacturer BYD, said last week. “20% to 30% of our employees are sick at home.”

Capital Economics analysts warned further that the COVID wave is likely to reach the further, rural reaches of the country in the next several weeks. “With the migration to rural areas ahead of Lunar New Year getting started, any parts of the country not currently in a major Covid wave are likely to be soon,” they said.

“That will further depress output.”

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