BEIJING – China’s retail sales plunged last month, official data showed today, as Covid-19 restrictions and a property market crisis hammered the world’s second-largest economy.
The figures highlight the work ahead for the government as it moves away from almost three years of strict containment measures that have whittled growth and sent shudders through supply chains.
November retail sales sank 5.9% on-year, marking the second successive contraction, according to data released by the National Bureau of Statistics (NBS).
The figure was also much worse than the 4% shrinkage forecast in a survey by Bloomberg News.
The data also showed industrial production grew 2.2% on-year last month, less than half October’s rate, while unemployment rose 0.1 percentage point to 5.6%.
China was the last major economy persisting with a zero-Covid-19 strategy through harsh lockdowns and mass testing, with authorities effectively abandoning the policy only last week after suffering an economic slowdown and mounting public anger.
November saw some of the highest infection numbers ever recorded in China, with as much as a quarter of the population under some form of lockdown by the end of the month, according to analysts’ estimates.
“In November, local outbreaks spread to most provinces across the country, residents’ travel decreased and consumption scenarios were restricted,” NBS statistician Fu Jiaqi said in a statement.
“The sales of non-essential goods and gathering-based consumption were significantly affected,” Fu said.
“While the move away from zero-Covid-19 lays the groundwork for an eventual recovery in activity down the line, the transition period will prove quite disruptive,” Julian Evans-Pritchard and Zichun Huang, economists at Capital Economics, said in a note today.
The economists predicted subdued economic performance in December and warned of declined activity as “many households try to minimise in-person interactions during the reopening wave of infections”.
But “reopening is happening much faster than the market expected two months ago, hence the transition period is likely to be shorter,” Zhiwei Zhang, chief economist at Pinpoint Asset Management, wrote in emailed comments today.
Chinese leaders have set an annual economic growth target of about 5.5%, but many observers think the country will struggle to hit it, despite announcing a better-than-expected 3.9% expansion in the third quarter.
A crisis rippling through China’s massive property sector has also weighed on the economy, with developers defaulting on loans and struggling to raise cash after Beijing imposed widespread lending curbs in 2020. – AFP, December 15, 2022
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