China’s decision to impose strict restrictions including a shutdown of several parts of the country, to contain the spread of Covid 19 has created confusion and concerns. Businesses have been taken aback by Beijing’s zero-covid approach as they fear that economic activities could get severely hit. “Many countries have started to treat Covid-19 as an endemic disease, while China continues to eliminate the virus, there will be more challenges in the future [for the economy,” South China Morning Post quoted Andrew Fennell, a senior director at Fitch Ratings as saying.

The restrictions have come in place at a time when the Chinese economy is already showing signs of slowing down.

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Owing to stricter environmental norms, acute power shortage and an increase in raw material prices, China’s factory output contracted further in October. Besides the crackdown on the private sector and now with real estate major Evergrande Group’s debt crisis have led to slowing down of consumption, critical to support growth.

SCMP reported that Fennell opined that the recent outbreaks of the Delta variant have prompted travel restrictions and lockdowns in some cities in China, damping economic activities, while Beijing’s tough stance to deleverage the property sector, which contributes 14 per cent to China’s gross domestic product (GDP), will further slow growth in the coming months.