China’s Economy Has All But Gone Overboard

China’s Economy Has All But Gone Overboard

over 1 year ago2 mins

Mentioned in story

Data out on Monday showed more signs that the Chinese economy’s lost at sea.

What does this mean?

China’s economy has been stuck in a long, dark tunnel, and there’s still no light in sight. See, monthly surveys ask companies’ managers how busy they’ve been compared to the month before, and give an almost real-time snapshot of economic performance. And last month’s results are less than encouraging: both China’s manufacturing and services sectors saw business activity shrink even more than economists expected.

China activity falls

China can partly blame the faltering global economy for the dip, but a lot of the onus lies closer to home. The country’s complete devotion to its zero-Covid stance is still causing trouble, with separate survey data out last week showing that locked-down locations make up nearly 10% of China’s economic output, up from 7% in mid-October. So while the People’s Republic did manage to grow more than expected last quarter, it might struggle to repeat that this quarter.

Why should I care?

The bigger picture: Self-fulfilling prophecy.

There’s no sign of that anti-Covid commitment wavering anywhere soon – if anything, China’s upping the ante. The country’s triggered more restrictions since the survey wrapped up last week, and there might be more to come: China recorded its biggest nationwide Covid surge since August over the weekend, and the winter months ahead could be a breeding ground for new cases too. And because economists are betting that the government will take a long time to phase out its zero-Covid policy, they expect China’s economic growth to stay capped below 5% each year until 2024.

China growth forecasts

Zooming out: Apples for Christmas.

Those on-again, off-again lockdowns are restricting the companies that manufacture in China too. Case in point: the biggest iPhone production plant in the country is grappling with potentially production-hampering outbreaks. That’s bad timing for Apple: the tech giant only recently released the iPhone 14, which it’ll be hoping will be one of the must-have gifts this festive season – if there’s enough to go around, that is.

Finimize

BECOME A SMARTER INVESTOR

All the daily investing news and insights you need in one subscription.

Disclaimer: These articles are provided for information purposes only. Occasionally, an opinion about whether to buy or sell a specific investment may be provided. The content is not intended to be a personal recommendation to buy or sell any financial instrument or product, or to adopt any investment strategy as it is not provided based on an assessment of your investing knowledge and experience, your financial situation or your investment objectives. The value of your investments, and the income derived from them, may go down as well as up. You may not get back all the money that you invest. The investments referred to in this article may not be suitable for all investors, and if in doubt, an investor should seek advice from a qualified investment advisor.

/3 Your free quarterly content is about to expire. Uncover the biggest trends and opportunities. Subscribe now for 50%. Cancel anytime.

Finimize
© Finimize Ltd. 2023. 10328011. 280 Bishopsgate, London, EC2M 4AG