China’s Covid Battle Impacting Its Economy

China has taken aggressive actions to achieve its “Zero Covid” policies with no regard for the impact it is having on its sputtering economy.

Mass lockdowns have become the norm in the country, with the most recent being in the city of Shanghai. The city of 27 million people was shut down in March for two months, which caused considerable disruptions in supply chains across the world.

Shanghai is the world’s biggest port and its shutdown reverberated not just in China, but across the world. Unemployment and long-term negative economic pressures are forecasted to continue even though the lockdown is over.

There appear to be problems in China’s economy in the short term as well. For example, small banks in the country are currently having issues giving depositors access to their money. This weekend hundreds of people gathered outside of the Zhengzhou branch of the People’s Bank of China. The peaceful protest was violently broken up by the country’s security forces.

Unfortunately for the Chinese people, Covid cases have begun to rise again in certain areas of the country. The Communist Party of China (CCP) has indicated that it will not hesitate to reinstitute the lockdowns in accordance with its Covid policy.

The Chinese economy is already clearly struggling under the weight of previous restrictions. The second-quarter economic figures are about to be released and it is forecasted that growth will be at 1%, a far cry from the 4.8% posted in the first quarter of this year.

Unemployment is also up in the country. Workers not working on farms between the ages of 16 and 24 are dealing with an 18.4% increase in joblessness.

International businesses have also taken notice of the uncertainty surrounding the CCP’s draconian measures; foreign investors are taking their money out of China in droves.

To make matters worse, the United States and the European Union economies are beginning to experience downturns themselves. As demand for goods from these countries falls, the manufacturing base of China is feeling it at the bottom line.

As a new subvariant starts to make its appearance, the virulent Omicron BA.5, more lockdowns could be on the way. If this occurs, it could seriously harm an already staggering economy.