ECONOMY CHINA
Covid shutdown
Maritime CEO picks apart Beijing’s economic data in the wake of crippling lockdowns
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fter nearly two years of seemingly holding covid at bay China appears to be slipping dramatically into a new wave that has seen globally unparalleled lockdowns that have been massively controlled and seen the government effectively taking over food supply logistics in major cities. While attention has, for obvious economic reasons, focussed on the 25m strong megalopolis of Shanghai dozens of other mainland cities have also been in equally harsh lockdowns including many with sizeable industrial and manufacturing bases. The staggering images of the number of vessels off the coast of Shanghai alone indicates the size of the problem and the knock-on effects that will be felt for some considerable time both in China and throughout the global supply chain. Yet, inexplicably to just about every economist China’s central government is claiming China’s
gross domestic product growth accelerated to 4.8% in the first quarter of 2022, from 4% in the final three months of 2021. This despite disastrous property sales numbers and lockdowns imposed in dozens of cities including the economic powerhouse of port and manufacturing centre of Shanghai. This seems to be unbelievable given purchasing managers indices, chamber of commerce member polls, electricity usage stats and, of course, port data. Real estate development is at a halt and, given that real estate development accounts for 20% of GDP, the remainder of China’s economy would have to growing at a remarkable 7% – retailing, e-commerce, tourism, hospitality, all growing at higher than previous levels for a decade, during lockdowns. Seemingly impossible. Given this situation it is impossible to view these recent statistical announcements as anything but
China-India Trade 2021 – Moving in the Right Direction Year
Imports ($bn)
Exports ($bn)
Growth (%)
2020
26
43
67
2021
9
15
65
Source: China General Administration of Customs
ISSUE TWO 2022
politically motivated. As one analyst told Bloomberg, if the government is going to seriously stick to the 4.8% statistics then that starts to raise broader questions about the longterm credibility of the data. So, what was first quarter growth? Most analysts come down somewhere around 2% GDP growth year-on-year. And there’s also the seemingly impossible official stat that disposable income rose 5.1% in real terms in the first quarter of the year. Credit Suisse in a household survey of 56 cities has calculated that genuine income growth averaged only 1% over the period. The covid lockdowns also mean that imports have largely collapsed and while some factories have reportedly got back to work they will soon run low on inputs if the lockdowns continue at the currently severe level. Meanwhile, with the major ports mostly closed, exports are backing up to alarming levels. It may yet still get worse. Shanghai appears a long way from full openness again, and if the zerocovid policy is adhered to in the future other major cities could find themselves in similar quarantine situations to Shanghai. ●
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