China’s economy skids as lockdowns hit factories and retailers

China’s retail and factory activity fell sharply in April as wide COVID-19 lockdowns confined workers and consumers to their homes and severely disrupted supply chains, casting a long shadow over the outlook for the world’s second-largest economy.

Full or partial lockdowns were imposed in major centres in March and April, including the most populous city Shanghai, hitting production and consumption and heightening risks for those parts of the global economy heavily dependent on China.

Retail sales in April shrank 11.1 per cent from a year earlier, the biggest contraction since March, 2020, data from the National Bureau of Statistics (NBS) showed on Monday.

Factory production fell 2.9 per cent from a year earlier, dashing expectations for a rise and the largest decline since February, 2020, as anti-virus measures snarled supply chains and paralyzed distribution.

Analysts now warn China’s current downturn may be harder to shake off than the one seen during the onset of the coronavirus pandemic in early 2020, with exports unlikely to swing higher and policy makers limited in their stimulus options.

“The upshot is that while the worst is hopefully over, we think China’s economy will struggle to return to its pre-pandemic trend,” Capital Economics analysts said.

The weak data sent China’s blue-chip stock index into the red and also put an end to the brief rally seen in other Asian markets on Monday.