Against the background of strict corona measures, Chinese economic growth fell significantly in the second quarter. Compared to the same period last year, the second largest economy only grew by 0.4 percent, as the Beijing Statistics Office announced on Friday. It is the weakest quarterly growth since the beginning of the corona pandemic. In the first quarter, the economy grew by 4.8 percent. This resulted in overall growth of 2.5 percent for the first half of the year.
The economy is suffering from the fact that Beijing does not want to move away from its strict “zero corona policy”. The aim of this is to nip any outbreak in the bud. Numerous megacities in China had imposed tough corona measures, especially in spring, to prevent the spread of the highly contagious omicron variant.
Shanghai, China’s most important economic hub, had to spend two months in a tough lockdown in April and May, which hit the economy hard. The port of the metropolis, the most important transhipment point in trade with China, only functioned to a limited extent.
“The middle class is increasingly feeling the effects, for example through stagnating incomes or falling real estate prices. This increases the political pressure on the government to find solutions,” commented Max Zenglein from the China Institute Merics in Berlin. The persistently weak growth is also amplifying existing problems in the financial system. Without a significant upturn, an increase in payment defaults is to be expected in the coming months. “The government’s most effective stimulus package would be a departure from the draconian zero-Covid strategy,” said Zenglein. But hardly anyone in China expects that.
Only a few infections can still lead to entire districts being cordoned off, as was the case again last week in the central Chinese metropolis of Xi’an. Infections are also repeatedly found in Beijing, Shanghai and the southern Chinese metropolis of Shenzhen, the three most important economic centers, which then lead to renewed restrictions.