China's economy will grow less because of authoritarian measures against Covid

Cidade de Xangai, principal porto da China, vive lockdown rígido desde março

Shanghai city, China’s main port, has been in strict lockdown since March

| Photo: EFE

)8014265769001 8014265769001The Chinese Communist Party’s insistence on the “Covid Zero” policy, the aim of which is to eliminate any trace of the coronavirus in China through strict lockdown and surveillance measures , should have drastic effects on the country’s economy: according to economists, the repression should make China’s annual economic growth reach 5%, below the official target of 5.5%.

By confining millions of people to their homes, the government has inhibited public spending and stopped production in large commercial centers, starting with the Shanghai region. While Prime Minister Li Keqiang has repeatedly warned of risks to economic growth, dictator Xi Jinping remains adamant and said this week that “the work of prevention and control cannot be relaxed.”

Epicenter of the recent outbreak – the biggest since -, the port city of Shanghai has been completely shut down by the authorities, causing the heaviest ship congestion ever seen at the port and other stops that receive the diverted shipments: according to transport data from Bloomberg , the number of container ships waiting in Shanghai at of April was 15% higher than a month earlier.

In addition, the lack of workers, prevented from leaving their homes, is delaying the delivery of documents required for ships to leave their cargoes, while ships carrying copper and ore Iron iron – essential metals for the Chinese economy – are stranded at sea due to the lack of trucks to transport them from the port to the processing plants. At the same time, domestic metal makers face obstacles to transporting raw materials and products, prompting six of the twelve copper bars factories in Shanghai’s neighboring provinces to announce that they intend to stop production.

The import of commodities also suffered the impact of restrictive measures already in March: added to the war in Ukraine, the decisions from the Chinese government caused natural gas purchases to fall below 8 million tonnes, the lowest level since October 2020. Imports of liquefied natural gas in the first quarter fell 14% in compared to the same period last year as international prices soar and domestic demand remains stagnant: daily flights have been reduced to levels lower than at the height of the pandemic in 2020 and train journeys with passengers only arrive at 30% of the normal level.

The weight of the Authoritarianism is also felt by tech companies that have frozen operations since last month, including some of the country’s top manufacturers. According to Bloomberg, as of last Wednesday, more than 30 Taiwanese companies, including the Pegatron Corp. and Macbook maker Quanta Computer Inc., halted production at electronic centers in eastern China because of Covid rules. Tesla Inc. in Shanghai, which produces around 2,000 cars a day, has been closed since 15 of March. Volkswagen was also forced to suspend its work, delaying deliveries to nearby suppliers.

8014265769001 Finally, there is the specter of inflation: the prices of fresh vegetables have gone up 14, 2% on year in March, compared with a 0.1% drop in February, according to data from the National Bureau of Statistics. Not even Chinese farmers in the northeast of the country, the region responsible for producing more than a fifth of China’s grain, were able to go out to work.

Back to top button