Zero-Covid endangers the Chinese economy

The radical zero-Covid strategy of the Chinese communist regime is taking revenge!

Chinese authorities lock down entire cities over a handful of corona cases, imprison millions of people. Result: completely desperate citizens – and now also a messy economy!

China’s economy started the new year with momentum, growing by an unexpected 4.8% in the first quarter. But Jens Hildebrandt, head of the Overseas Chamber of Commerce in Beijing, cautions the growth “so far hardly seems to reflect the war in Ukraine and the current Covid outbreaks in China”.

Consumption in the country has now declined “worryingly”.

This year, the Chinese regime is aiming for 5.5% growth – but this target is flawed! Max Zenglein of the Mercator Institute for China Studies (MERICS) in Berlin: “After last year’s strong economic recovery, the Chinese economy looks surprisingly fragile. Without a massive stimulus package, the outlook for 2022 looks bleak. »

The radical corona policy “will continue to stifle consumption, which is already weakening, for the foreseeable future”. According to Zenglein, inflation in Europe fueled by the war in Ukraine also has consequences for China: because silver in countries like Germany is rapidly losing value, they can import less from the Far East. German exporters had to accept a drop of almost 10% in their trade with China in March.

The shaken economy could also become a problem for the head of state and party leader Xi Jinping (68): he wants to be confirmed in office at a party conference in the fall and depends on a a well-functioning economy, in particular a stable labor market. . Eleven million college graduates will need to find jobs this year – more than ever.

“A politically very explosive year,” says expert Zenglein: “The Chinese government will have to expand the economic stimulus package and rely more on infrastructure programs and state-owned enterprises to stabilize growth.” The debt will increase accordingly.

In order to stimulate the economy, the Chinese central bank had already announced on Friday that it would slightly lower the mandatory reserve requirements for banks. This should inject 530 billion yuan (76 billion euros) into the long-term economy and support businesses.

Background: China is currently experiencing the biggest corona wave since the pandemic began more than two years ago. There are curfews in the economic metropolis of Shanghai, among other places. Millions of people cannot leave their homes.

Oxford Economics experts assume that the measures and therefore the restrictions imposed on the Chinese economy will continue for weeks.

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