Xi Jinping’s “Zero Covid” policy continues to weaken the economy

The “Zero Covid” policy continues to hit China’s economy hard. The population is examined every day, and those who have tested positive are subject to mandatory quarantine, as well as arrests in case of cases. As a result, the Chinese are consuming less and activity is slipping.

This is shown by the official producer price figures released by the National Bureau of Statistics (BNS) on Wednesday. The PPI index, which measures the value of products leaving the factory, fell 1.3% year-on-year last month. When this index is in the red, it generally reflects weak demand and a drag on corporate earnings. Although producer prices gained 0.9% in September, they experienced the weakest growth rate in a year.

In addition, the country’s exports were hit in October for the first time since 2020 by the impact of health restrictions and the threat of a global recession.

Broadly speaking, this situation causes concern in the international world. ” Bets on China’s next reopening worsen as Covid cases rise in Guangdong province », refers to Edward Mo of Oanda. ” Optimism about a possible reopening of China has given way to the notion that the prospect of any reopening could take months.CMC Markets analyst Michael Hewson is bountiful. “Recent trade data from China also highlighted the economy’s weakness”he continues.

China’s slowdown affects the IMF’s Asia-Pacific growth forecast

Price increase of pork

In turn, the consumer price index, a key indicator of inflation, rose 2.1% over the year in October, up from 2.8% a month earlier. This is of particular concern to the Chinese authorities, as the increase is mainly due to the increase in pork prices, which was caused by the swine fever epidemic that decimated the Chinese herd in 2019. Thus, they increased by 51.8% in October. Despite the intervention of the authorities in the market to prevent this epidemic, the price of the most consumed meat in China is still increasing by 9.4% from one month to the next. However, China has been relatively spared the rise in global food prices since Russia’s invasion of Ukraine.

The number of billionaires is decreasing sharply

At the same time, China is experiencing an unprecedented crisis in real estate, historically the engine of growth. It is proven by the huge loss of real estate developer Yang Huiyan, who heads the Country Garden holding company. It lost 15.7 billion dollars this year. If he’s the Chinese billionaire who lost his biggest personal fortune, he’s not the only one. Pony Ma, the founder of the high-tech giant Tencent, increased by 14.6 billion. Zhang Yiming, the founder of ByteDance, the parent company of the social network TikTok, is the second-largest Chinese billionaire, but his fortune fell 28% to 35 billion, while the value of the company fell. Only Zhong Shanshan, the founder of Nongfu Spring and this year’s richest Chinese, increased his wealth by 17% to $65 billion. Jack Ma, the founder of Alibaba, lost 29% of his wealth to 25.7 billion, falling from the 5th place to the 9th place.

Overall, the number of billionaires in China this year has seen its biggest decline in 24 years. The wealth of 1,305 people in China is estimated to be at least 5 billion yuan ($691 million), down 11% in a year, according to a ranking compiled by Chinese firm Hurun and published on Tuesday. Their total wealth has decreased by 18% and is around 3,500 billion dollars. Both in terms of the number of billionaires and their accumulated wealth. So, about 300 Chinese who were on this list last year are no longer there, most of them are in the real estate sector, since 2020 China is experiencing a crisis. In particular, Xu Jiayin, the president of the real estate giant Evergrande, left the company. He has fallen to 172nd place in the ranking of the 100 richest people, and his company is collapsing under 300 billion dollars in debt.

The International Monetary Fund (IMF) predicts growth in China of 3.2% this year, which would be the slowest pace in four decades, barring the pandemic.

(via AFP)