The stringent control measures due to the COVID-19 outbreak are putting a heavy toll on China’s economy.

Export is a major driver of the China economy. Reuters reported that China’s exports rose 14.7% in March. It was slower from a 16.3% gain in the past two months.

The supply chain disruption caused by the epidemic has affected exports.

Japanese investment bank Nomura said in a note that it expects export growth to slump to 0.0% year on year.

According to official data, China’s nationwide consumption fell 3.5% year on year in March. The spending on restaurants plummeted by 16,4%.

National Bureau of Statistics spokesperson Fu Linghui said that the Covid outbreaks in March hampered production in some areas. It also harmed consumption. Catering, tourist, and transportation sectors have been particularly heavily hit.

He said that unemployment has risen because of the “Covid shock.”

In March, unemployment in 31 major cities reached a new high of 6%. Unemployment among individuals aged 16 to 24 reached 16%. It reached the highest level in eight months.

The slowdown that started in late March is expected to worsen this month.

According to Gavekal Dragonomics, by April 11, 87 of China’s top 100 cities had enforced some movement restrictions.

Chinese Premier Li Keqiang has recently called for local officials to take action. He said they should find ways to limit the impact of the COVID shutdown on the economy.

At a recent news conference, Yao Jingyuan, a cabinet adviser, said that Shanghai and Shenzhen are important parts of the entire supply chain. So the lockdown there will affect the whole of the Chinese economy.

The Chinese government has set a growth target of around 5.5%, the lowest in three decades. But the Covid outbreak has made it more challenging for them.

CNN cited Japanese investment bank Nomura said that it expects China’s economy to plummet in April because of the recession risks in the second quarter.

The International Monetary Fund cut China’s growth forecast to 4.4% from 4.8%. The Fund cited risks from Beijing’s strict zero COVID policy as the reason.

In addition, China’s strict lockdowns with no warning affect foreign investors. At least a few western importers are finding some other suppliers.

Jake Phipps, the founder of Phipps & Company, an American importer and distributor of home furnishings, is one of them. He said he had been shifting many orders away from China for two years.

Chinese stocks plummet as investors are concerned about the extending lockdown in some of the country’s largest cities.

The Shanghai Composite Index fell below 2,900 points on April 26, after starting this year at 3,632 points.

Bloomberg reported that first-time share sales in Hong Kong raised just 1.9 billion dollars in the first quarter this year. It dropped nearly 90% from the same period in 2021.

Experts warn that Chinese stocks will remain volatile.

Dan Pipitone, CEO and co-founder of brokerage firm TradeZero, told CNN that some US investors are shorting Chinese stocks actively. When investors expect a stock’s price will fall, they sell it “short.”

According to Pipitone, customers of TradeZero were shorting Alibaba, JD, Nio, ridesharing firm Didi, real estate brokerage KE Holdings, and cloud leader Kingsoft.

CNN cited data from the Institute of International Finance, saying the portfolio outflows of China reached an all-time high of 17.5 billion dollars last month. Bonds accounted for 11.2 billion dollars of the withdrawals, while equities accounted for the rest.

According to China Central Depository and Clearing, offshore investors offloaded a net 35 billion yuan or 5.5 billion dollars of Chinese government bonds in February. This is the largest monthly reduction on record.

In March, the sell-off picked up speed, reaching a record high of 52 billion yuan or 8.1 billion dollars.

George Magnus from the China Center at Oxford University said that the Chinese economy is already sapped, but the zero COVID policies of the Chinese government have made it worse.

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