China’s prime minister has issued an unusually stern warning about the world’s second-largest economy, saying the country’s zero-quad strategy is bound to return to normal as it bites growth.
China is the last major economy to undergo extensive testing and rapid lockdown to eradicate virus clusters, but stricter sanctions have hurt businesses.
Restrictions on dozens of cities in recent months – including manufacturing centers in Shenzhen and Shanghai, as well as Jilin’s bread baskets – have crippled supply chains and pushed economic indicators to their lowest levels in nearly two years.
According to a readout by the state-run Xinhua news agency, in some ways, the challenges now are “greater than when the epidemic hit in 2020,” Premier Li Keqiang told a State Council meeting on Wednesday.
“We are currently at a critical juncture in determining the economic trends for the whole year,” Xinhua quoted Lee as saying.
“We must seize the time window and try to get the economy back on track.”
Lee’s remarks are the latest in a growing chorus of calls from officials and business leaders for a greater balance between stopping the virus and helping the ailing economy.
China’s retail sales fell 11.1 percent in April, while factory output fell 2.9 percent – the worst performance since the first day of the Kovid crisis.
And the urban unemployment rate returned to its peak in February 2020, challenging policymakers’ full-year growth targets by about 5.5 percent.
In March, and especially in April, employment, industrial production, electricity consumption, and freight indicators declined “significantly,” Lee told a State Council meeting.
Xinhua said he stressed the importance of coordinating virus control and economic development.
The current outbreak in China – driven by the highly contagious Omicron virus variant – is the worst since the first days of the epidemic in 2020.
Its largest city and business center, Shanghai, has been closed almost completely since April, crushing businesses, while sanctions are crawling in the capital, Beijing.
The government has proposed tax relief and a bond drive to help the industry, and President Xi Jinping has called for pushing for an “all-out” infrastructure.
However, analysts warn that growth will continue to decline unless China tightens its grip on the virus.
The S&P Global Rating this month lowered its full-year growth forecast for China from 4.9 percent to 4.2 percent due to the control of Kovid.
And Nomura analysts warned in a recent note that “there is a growing possibility of negative GDP growth in the second quarter.”
The State Council teleconference on Wednesday involved an unusually large group of provincial, city and county officials, the Chinese outlet The Economic Observer reported.
The economic crisis comes at a crucial political year for Shir, who is set to return to power in the Communist Party Congress this fall.
(Except for the title, this story was not edited by NDTV staff and was published from a syndicated feed.)