The resurgence of Covid 19 in parts of China, which was the first country to register growth amid the pandemic, has once again cast a shadow over economic revival. Covid induced restrictions have been already imposed in several provinces, affecting both consumers and businesses.
What is more worrisome is that the recovery has been patchy with muted consumption growth in several provinces.
Even under the guidance of President Xi Jinping’s new “dual circulation” strategy, which seeks to tap China’s huge domestic market to power future growth, local consumption is recovering more slowly than exports, as foreign demand for Chinese goods surged during the pandemic, South China Morning Post said.
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Meanwhile Goldman Sachs Group has slashed China’s growth projection for the current year to 8.3 per cent from 8.6 per cent. After registering an 18.3 per cent growth in the first quarter of this year, China’s growth slowed to 7.9 in the April to June quarter.
“Even though a year and a half has passed since the pandemic hit, some places still haven’t recovered to their pre-pandemic levels and so experienced negative growth. This is actually quite surprising,” SCMP quoted Zhang Zhiwei, President and Chief Economist at Pinpoint Asset Management as saying.
Zhang also said that the impact of the pandemic on economic growth may be longer than anticipated.
The economic slowdown has also led to an increase in the level of non performing assets for China’s banks.
China Banking and Insurance Regulatory Commission Guo Shuqing even warned of a further rise in bad loans this year.
“The banks have been aggressively lending towards the ambitious Belt and Road Initiative. However now the government has tightened the regulatory norms, which will make it difficult for the banks and local governments to freely lend,” an analyst told India Narrative. He added that this has further led to concerns.
Analysts said that the slowing of economic growth in China in the April-June quarter marks a halt to the anticipated V-shaped recovery in the post Covid phase.
