Canadian Manufacturing

China’s economy grows slowly from January to March due to pandemic pressures

The slowdown hurts China's trading partners by depressing demand for imported oil, food and consumer goods.

April 18, 2022   by Associated Press

Chinese leaders face pressure to shore up sinking economic growth after Shanghai and other cities shut down to fight coronavirus outbreaks, threatening to disrupt global trade and manufacturing.

Growth slid to 1.3% over the previous quarter in the first three months of 2022, down from a 1.4% rate in last year’s final quarter, official data showed on Apr. 18. Compared with a year earlier, a measurement that can hide recent fluctuations, growth was 4.8%, up from 4% in the final quarter of 2021.

In a sign the slide might be deepening, March retail sales fell 3.5% from a year earlier.

This month’s activity is “set to be even worse,” Julian Evans-Pritchard of Capital Economics said in a report. “China’s economic performance is likely to remain lackluster in the near-term.”

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The ruling Communist Party, which set a 5.5% growth target this year, already was trying to reverse a slump that started in mid-2021. Pressure mounted after last month’s surge in infections prompted Beijing to suspend access to Shanghai, a city of 25 million people, and other industrial centers.

“Further impacts from lockdowns are imminent,” Iris Pang of ING said in a report.

The slowdown hurts China’s trading partners by depressing demand for imported oil, food and consumer goods. Oil prices, which spiked after Russia’s attack on Ukraine, have eased on expectations Chinese consumption will weaken.

The ruling party promised tax refunds and other aid to businesses after tighter controls on use of debt triggered a slowdown in China’s vast real estate industry. Last week, Premier Li Keqiang, the No. 2 leader, called for quicker action to help entrepreneurs who generate China’s new jobs and wealth.

Forecasters say Beijing is using cautious, targeted stimulus instead of across-the-board spending, a strategy that will take longer to show results. Chinese leaders worry too much spending or bank lending might push up politically sensitive housing costs or corporate debt they worry is dangerously high.

Meanwhile, China faces more headwinds from a possible slowdown in the European Union, a major export market, due to Russia’s war on Ukraine and higher oil and gas prices, according to Rajiv Biswas of S&P Global Market Intelligence.

That would “hit China’s manufacturing export sector,” Biswas said in an email.

The flow of industrial goods has been disrupted by the suspension of access to Shanghai, home of the world’s busiest port, and other industrial cities including Changchun and Jilin in the northeast. Global automakers and other manufacturers have reduced or stopped production at Chinese factories.

The disruption “will weigh on activity in April and into May, if not longer,” Tommy Wu of Oxford Economics said in a report. That is “likely to have a significant impact on global supply chains.”


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