A COVID-19 lockdown in Jilin Province forced the Chinese automotive and farming hub into a steep contraction in the first quarter, flashing a warning sign about the mounting economic costs of “COVID-19 zero” policies as Shanghai and other regions grapple with similar restrictions.
GDP in Jilin dropped 7.9 percent in the January-to-March period from a year earlier, the local statistics bureau said on Thursday, after the province was locked down last month to curb a COVID-19 outbreak.
The damage to production and consumption has continued into this month, with the province’s lockdown only now starting to be lifted.
With lockdowns spreading to Shanghai and other cities, the fallout in Jilin is a guide to how damaging the Chinese government’s efforts to stamp out the virus through hard controls or movement restrictions could be to China’s economy.
While Shanghai and Jilin appear to be bringing their outbreaks under control, lockdowns and restrictions are spreading to other cities trying to contain virus flareups. That is threatening to exacerbate the hit to growth.
The Chinese Communist Party’s top decisionmaking body yesterday vowed to boost economic stimulus to spur growth, but it did not back off the “COVID-19 zero” policies that are dragging on the economy.
The turmoil has prompted economists to repeatedly cut their expectations for the Chinese economy this year. The median forecast is now for 4.9 percent growth, below the government’s target of about 5.5 percent.
In Jilin, industrial output plunged 36.7 percent last month alone and fell 10.5 percent during the quarter, data from the Chinese National Bureau of Statistics showed.
Retail sales shrank 4.2 percent and fixed asset investment was down 31.8 percent.
Jilin is the only provincial economy that reported a contraction in output of the 30 provinces that have reported first-quarter data.
The industrial hub of Changchun in the province first went into lockdown on March 11, followed by the rest of Jilin, shuttering factories and keeping most of its 24 million people in their homes.
The northeastern province borders North Korea and Russia and is a major center of vehicle production, with the local factories of Volkswagen AG shutting for weeks due to the lockdowns and Toyota Motor Corp plants still closed.
Cities across China are stepping up controls and mass-testing drives to try to contain and quash flareups of COVID-19. Shanghai remains under lockdown even as cases fall, while Beijing has sealed off several housing compounds and could close more of the city.
Many other cities, including Hangzhou, an e-commerce hub near Shanghai, and Yiwu, the wholesale hub for Christmas decorations and other consumer goods, are either conducting mass testing or being placed under lockdowns.
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