BEIJING, China—China’s retail sales and factory output slumped to their lowest levels in around two years, official data showed Monday, capturing the dismal economic fallout from Beijing’s zero-COVID policy.
The world’s second-largest economy has persisted with strict virus measures, choking up global supply chains as dozens of Chinese cities—including key business hub Shanghai—grapple with restrictions.
Although officials have said they plan to gradually reopen the city over the next month, there is no sign of Beijing shifting from the strict zero- COVID approach which analysts warn is severely hitting the economy.
The latest cut came Monday when the National Bureau of Statistics (NBS) announced data showing that retail sales shrank 11.1 percent on-year in April.
It is the biggest slump since March 2020, as consumers remained cooped up at home or jittery over restrictions as China battles its worst COVID outbreak since the early days of the pandemic.
“In April, the epidemic had a big impact on economic operations,” NBS spokesman Fu Linghui told reporters Monday, adding that the outbreak had a “significantly larger-than-expected” effect.
But he stressed that the hit would be “short-term.”
Industrial production growth sank 2.9 percent on-year, reflecting damage from shuttered factories and transportation woes as officials ramped up COVID restrictions last month.
This figure is down from 5.0 percent growth in March.
“The prolonged Shanghai lockdown and its ripple effect through China, as well as logistics delays resulting from highway controls… have severely affected domestic supply chains,” said Tommy Wu, lead China economist at Oxford Economics.
He added that household consumption was “hit even harder” and disruption to activity could extend into June, with any rebound likely to take weeks.
Shanghai was put under heavy restrictions in early April with some 25 million told to stay home in what was originally portrayed as an eight-day lockdown across two halves of the city.
But the shutdowns have dragged on weeks and wreaked havoc on supply chains, crushed small businesses and spread frustration across the city’s population.
Officials promised over the weekend to start reopening the city in phases over the next month but business owners who spoke to AFP were skeptical.
“I don’t have even the slightest expectation about (being able to reopen soon),” one restaurant owner told AFP, asking to remain anonymous.
“Why are people still believing them?”