China’s ailing economy ends up on life support
Covid-19 lockdowns across the country have snuffed out business activity and fueled an unemployment crisis
China’s economy will spend spells in intensive care until Beijing fast-tracks “research and development of” Covid-19 “vaccines.”
A “zero-tolerance” policy to the highly-infectious Omicron strain has seen mass lockdowns across the country in the past two months.
On June 1, China’s largest city Shanghai finally opened up again after a 60-day shutdown. It came as the latest economic numbers were released. Anemic barely described the state of the data. Still, it was not lost on Vice-Premier Liu He.
“[We] should enhance the study on the mechanism of viruses and the research and development of vaccines and drugs, deepening the study of significant changes facing human epidemics,” President Xi Jinping’s economic tsar told a meeting with the Chinese Academy of Engineering earlier this week as reported by the official Xinhua News Agency.
China’s vaccines have shown a lower efficacy rate compared to mRNA Covid shots produced by Pfizer-BioNTech and Moderna. Another challenge has been the low vaccination rate for the country’s elderly, particularly those aged 80 and above.
In turn, this has seen nearly 400 million people forced into various lockdown protocols under Xi’s “zero-Covid” strategy and left a badly-funded healthcare sector creaking.
“China’s healthcare system was understaffed and struggling to cope with its huge and aging population even before the pandemic. Some Chinese regions are woefully under-resourced,” Medical Xpress reported.
- Factory activity was again in negative territory last month compared to the same period in 2021.
- Unemployment has surged with the jobless rate among those aged between 16 and 24 hitting a record-breaking 18.2% in urban regions.
- Up to 300 million migrant workers are not even included in the official statistics.
- To ease the pain, a staggering US$5.3 trillion will be pumped into the economy this year, according to Bloomberg’s calculations.
- That will “equate to roughly a third of China’s $17-trillion economy.”
- Behind the scenes, Beijing is waging a battle against “fake” economic data, the National Bureau of Statistics highlighted.
- Falsifying figures appear to be rampant despite the latest NBS crackdown.
What was said: “Those PMIs stink to high heaven,” research group China Beige Book tweeted after the release of the latest official manufacturing purchasing managers’ index, or PMI, on factory activity.
Delve deeper: Premier Li Keqiang has described the unemployment problem as “complex and grave.” He also warned there were “provinces reporting that only 30% of businesses have reopened.”
What that means: “The ratio must be raised to 80% within a short period of time,” Li stressed.
So, how bad is it: “China’s senior policymakers are freaking out about the economy,” Trivium China stated in a newsletter last week.
Mobilize the cadres: “On Wednesday [May 25], senior officials held a national teleconference with over 100,000 cadres [yes, that number is right] to discuss the dire economic situation and layout a plan for getting growth back on track,” the research and consultancy group said.
China Factor comment: China’s healthcare sector has been starved of funding under President Xi’s 10-year watch. The end product has been China’s “zero-tolerance” policy to protect the country’s overcrowded hospitals and curb ballooning Covid-19 deaths. Unfortunately, the first serious casualty has been the economy.