Will China reach the target this year? of 5.5% growth that it has set itself? Nothing is less sure. With the world’s second-largest economy still enforcing drastic anti-Covid restrictions, economists are beginning to see the weakest growth achieved since 1990 – excluding a Covid year in 2020. Instead of continuing its restart with fanfare, the Chinese engine is indeed showing several signs of slowing down.
As a result, the main European stock markets are expected to fall on Monday after the publication of several Chinese economic indicators below expectations. The CAC 40 opened at -0.64%.
Particularly watched by the Chinese government, the unemployment rate thus stood at 6.1% in April. A level close to the absolute record of 6.2% in February 2020, at the height of the initial epidemic wave. Note also that in China, unemployment is calculated for urban dwellers only and de facto excludes the millions of migrant workers, who are particularly vulnerable.
As a reminder, in 2020, China was the only country to record a positive GDP, at 2.3%, when all the other economies were in recession. But the context of the war in Ukraine is reshuffling the world trade cards and “stagflation” (sluggish growth, high inflation) is watching the developed economies.
Beijing has set itself the goal of creating some 11 million jobs this year, a figure down from 2021 (12.69 million). But this criterion does not provide any information on the number of jobs destroyed because of the health crisis.
Industrial production down
Also, the industrial production of China declined in April by 2.9% year on year, marking a sharp slowdown after growing 5% in March, official statistics show.
Analysts were only anticipating a sharp slowdown (+0.5%), when the Shanghai shutdown disrupts supply chains.
Faced with these risks of a slowdown, Shanghai has also had to relax its anti-Covid policy with the reopening of certain businesses on Monday.
Retail sales continued to decline, down 11.1% year on year last month, after falling 3.5% in March, due to tighter health restrictions in the face of Covid-19. 19.
As for fixed capital investment, its growth slowed down over the first four months of the year to 6.8% against 9.3% at the end of March, according to the SNB.
At the heart of the slowdown, moreover, is the danger of private real estate investment, like the scandal of the promoter Evergrande.
The impact of Covid on activity will be “short-lived”, tried to reassure a spokesperson for the BNS, Fu Linghui, judging that a recovery was looming.
Above all, Beijing could resort to special measures, mainly tax breaks to support its economy. A further cut in key rates, increasing public debt, could also be considered.
In December, the Central Bank of China had already lowered these two rates for the first time in 20 months. The key rate now stands at 3.7%. The aim is to facilitate credit conditions for households and businesses.
In 2021, China recorded an annual growth of 8.1%, the highest for almost a decade.
(With AFP and Reuters)
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