By Isaac Cohen*
With 31 cities and 247 million people under drastic lockdown, equivalent to one fifth of the population, the Chinese economy slowed down during this year’s second quarter. According to China’s National Bureau of Statistics, economic growth in the second quarter was 0.4 percent from a year earlier, the lowest in the last two years. The Japanese investment firm Nomura, quoted in The New York Times (07/16/22), estimated the slowdown amounts to around one fourth of China’s gross domestic product.
Still, some sectors of the Chinese economy performed better in the last quarter, such as exports and infrastructure investment. By contrast, the real estate sector and the high-tech companies have contributed to the slowdown intensified by the zero-Covid policy.
This setback is generating concern, because the Chinese economy will not be the locomotive for world economic growth, as it was through massive public investments after the Great Recession of 2008. This time, the most vulnerable are those emerging market and developing economies for which China has become the main trading partner.
The main difference now is the zero-Covid policy, implemented through drastic lockdowns of cities, as in the 25 million city of Shanghai, the country’s largest urban and manufacturing hub, closed during April and May.
*International analyst and consultant, former Director ECLAC Washington. Commentator on economic and financial issues for CNN en Español TV and radio, UNIVISION, TELEMUNDO and other media.