Shanghai blockade puts pressure on China’s economy


Is this the last “good number” for the Chinese economy for a long time? Beijing announced on Monday, April 18th, in the first quarter of 2022, a recovery of 4.8% growth over the year. Indeed, this number is far from pre-Covid levels. China’s growth rate was 6-7% in 2018 and 2019, 10% a few years ago, but performance is better than expected (4, 3%).

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Nevertheless, it is in contrast to the image of Shanghai, which is completely deserted or almost revealing the streets. Because the country’s 25 million inhabitants of economic and financial capital have been partially trapped from the end of March, or more precisely from the beginning of April, under the influence of the epidemic associated with the Omicron subspecies. is. Chinese authorities practicing the “Zero Corona” strategy have decided to contain this, and the impact of the consequences on national activities is clear.

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Undoubtedly, the first signs of a slowdown are there: unemployment rose slightly (5.5% to 5.8%) and retail sales plummeted (January-February + 7.5% -March – 3.5%), production slowed (+ 7% earlier this year, + 5% in March) and, like growth, did not accelerate as rapidly as in the first quarter.

“In this situation, it’s hard to imagine achieving the national goal set by the Communists to grow GDP by 5.5% by the end of 2022,” he said. Saxo Bank’s Christopher Denbic points out. And justification: Confinement hinders household consumption – in addition to Shanghai, tens of millions of Chinese were trapped in a technological metropolis of Shenzhen (south) in March, the northeastern part of the country, the birthplace of automobiles. The industry is still trapped in.


Shanghai Port works difficult and in slow motion. Due to the complete outage of certain sectors in a limited area, access is difficult and the receipt of goods from the country is low. “This is 40% of China’s GDP.”Emphasize Christopher Denbic.

China’s quest for growth

The stakes are high for Xi Jinping, who wants to be reappointed as the head of the country for a new term at the end of 2022. “The main question is Analysis Ostrum Asset Management Philippe WaechterKnowing where China’s growth is coming from now. Not only is domestic consumption weakening, but soaring energy prices and the war, especially in Ukraine, have reduced foreign purchases from China. Finally, real estate, which has traditionally been a pillar of China’s activity, is threatened by the bursting of the debt bubble. »»

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Difficulties have already begun to be exported. Especially through international trade channels: the supply chain has hardly begun to recover from the first shock associated with Covid, which was weakened again two years ago: cargo that did not arrive at Shanghai Port, or delayed, or. An incomplete ship that is behind normal or has a small load capacity and is canceling a specific stop on the way back …

“China’s transportation turmoil arises in addition to those related to certain causes, such as wars in Ukraine, sanctions in Russia, or docker strikes in the United States.” Decrypt Christopher Dembik.

European recession?

Does the West get the flu when China coughs? Economists are separated. For Philip Wechter, this Chinese brake is not particularly unaffected by the European economy. “A recession in 2022 – ahead of the United States in 2023. In addition, the German economy has already declined for two quarters and is at a disadvantage due to declining demand in China.” »» But if the European economic locomotive slows down, “France, the first trading partner, will now be drawn in and trapped.”Predict Philip Wechter.

At Saxo Bank, Christopher Denbic knows that growth forecasts need to be revised downwards, but not enough to end the 2022 recession. “The world economy faces many shocks, both in serious concurrencies.”.. And to quote Covid, “It doesn’t come out easier than expected”The war in Ukraine and the energy shocks that are helping it intensify, and the difficulties of China, the driving force of the world economy.