Shanghai’s ‘circulation lockdown’… China’s economic stability burden grows

The immediate aftermath of Tesla’s 4 day shutdown… Service industry expected to be hit hard

“It is already difficult to achieve the 5.5% growth target”… Stronger economic stimulus observations

(Shanghai = Yonhap News) Correspondent Cha Dae-woon = The virtually total blockade of Shanghai, called the ‘economic capital’, is rapidly emerging as a major burden on the Chinese economy.

From the 28th to the 8th, Shanghai will divide the city in halves from east to west and block them in turn. The Pudong region, which is east of the Huangpu River, was put under lockdown for 4 days from this day, and the Pudong region, which is west of the Huangpu River, will be locked down for the remaining 4 days.

Most of the economic activities have been halted as all residents, except for those working in key public services such as medical care and essential industries such as delivery and food supply, have to stay indoors in principle and undergo a COVID-19 confirmation test conducted by each complex.

Shanghai is the financial and trade center of China. In Shanghai Pudong Lujiazui Financial District, which is called the ‘Chinese version of Wall Street’, the headquarters of various financial institutions such as banks, securities companies, and asset management companies are concentrated in addition to the stock exchange. Yangsan Port in Shanghai is the largest import and export port in China.

In addition, Shanghai, the core city of the Changjiang Delta, an economic development zone on the eastern coast of China, is also a place where core industries such as semiconductors, artificial intelligence (AI), biotechnology, and automobiles have developed. Last year, Shanghai accounted for 3.8% of China’s gross domestic product (GDP).

Some experts predict that there will be difficulties in achieving the economic growth target of 5.5% set at the recent National People’s Congress, as the omicron mutation pandemic is showing signs of full swing in almost all parts of China, including Shanghai. there is.

Caster Fang Yamaichi, chief research officer, told Bloomberg: “Investors are wary of economic growth pressures from the further spread of COVID-19 and tough countermeasures. and the potential expansion of lockdowns to other regions will make it more difficult for China to meet its 5.5% growth target this year.”

“The key is how long the lockdown in Shanghai will last, but it seems that it has already become difficult to achieve 5.5% growth this year,” said the head of a financial company in Shanghai on the phone.

The aftermath of the circular blockade was immediate.

The People’s Daily-affiliated Internet media, Observer Network, citing sources, said that Tesla’s factory in Lingang District, Pudong New District, Shanghai will be shut down for four days from today.

However, there are many views that the economic impact of the lockdown will have a greater impact on the service sector than on the manufacturing sector.

Chinese authorities have allowed certain important industries to operate in a ‘prevention bubble’ method, in which employees camp in factories or only go to and from designated lodgings and factories, even if certain areas are blocked.

In fact, SMIC (中芯國際, Zhongxin Guoji), a foundry (semiconductor consignment production) that China is strategically fostering, issued a statement on the same day and said that the Shanghai plant was operating normally.

Yangsan Port in Shanghai is also reported to be operating normally with essential personnel.

However, unlike the manufacturing industry, the service industry is hard to recover from the losses during the lockdown period, and the contraction in consumption continues for a long time after the lockdown.

“Experts see the industrial sector in Shanghai largely able to overcome the turmoil, but the lockdown will take a toll on businesses that rely on consumer spending,” Bloomberg said.

As Corona 19 has already spread in 28 of China’s 31 provincial administrative districts this month, concerns are growing over consumption contraction across China. Still, consumption, which is considered to be the most important among China’s three engines of economic growth, has not returned to its original trajectory for a long time since the Wuhan outbreak in 2020.

Due to the recent crash of a Eastern Airlines flight and the spread of Corona 19, the price of a one-way ticket from Guangzhou to Shanghai fell below the record low of 100 yuan (about 19,000 won), and it became a big topic on the Internet in China. Wealth reflects the cold wave.

Despite the easing of regulations by the authorities, the real estate market, which is the key to economic stability, continues to stagnate and external uncertainties such as the Ukraine war have grown, and the spread of COVID-19 has become serious. It is also suggested that there may be

On the 16th, the Chinese government emphasized that it would implement an ‘active monetary policy’ with the help of Deputy Prime Minister Liu He, who was President Xi Jinping’s ‘economic adviser’, to surely boost the economy in the first quarter of this year.

Larry Hu, an economist in charge of China at Macquarie Securities, said, “China’s policymakers will have no choice but to step up stimulus within the next few months to achieve their growth target of around 5.5 percent this year.” expected to increase support.

cha@yna.co.kr

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