What's going on?
Data out on Monday showed more signs that the Chinese economy’s lost at sea.
What does this mean?
China’s economy has been stuck in a long, dark tunnel, and there’s still no light in sight. See, monthly surveys ask companies’ managers how busy they’ve been compared to the month before, and give an almost real-time snapshot of economic performance. And last month’s results are less than encouraging: both China’s manufacturing and services sectors saw business activity shrink even more than economists expected.
China can partly blame the faltering global economy for the dip, but a lot of the onus lies closer to home. The country’s complete devotion to its zero-Covid stance is still causing trouble, with separate survey data out last week showing that locked-down locations make up nearly 10% of China’s economic output, up from 7% in mid-October. So while the People’s Republic did manage to grow more than expected last quarter, it might struggle to repeat that this quarter.
Why should I care?
The bigger picture: Self-fulfilling prophecy.
There’s no sign of that anti-Covid commitment wavering anywhere soon – if anything, China’s upping the ante. The country’s triggered more restrictions since the survey wrapped up last week, and there might be more to come: China recorded its biggest nationwide Covid surge since August over the weekend, and the winter months ahead could be a breeding ground for new cases too. And because economists are betting that the government will take a long time to phase out its zero-Covid policy, they expect China’s economic growth to stay capped below 5% each year until 2024.
Zooming out: Apples for Christmas.
Those on-again, off-again lockdowns are restricting the companies that manufacture in China too. Case in point: the biggest iPhone production plant in the country is grappling with potentially production-hampering outbreaks. That’s bad timing for Apple: the tech giant only recently released the iPhone 14, which it’ll be hoping will be one of the must-have gifts this festive season – if there’s enough to go around, that is.