Is a zero-Covid policy hurting China's economic recovery?

While China's exports are doing well, the government's zero-tolerance policy on Covid-19 plus other factors are having an impact on aggregate demand and supply, posing challenges to its recovery. China's slowing economic growth poses challenges for the world's economic recovery.

The coal-powered Datang International Zhangjiakou Power Station in China’s Hebei province. PHOTO: AFP
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According to recent data from the National Bureau of Statistics (NBS), China's third-quarter economic growth rate is 4.9 per cent, which is down from the 7.9 per cent growth in the second quarter. In particular, the manufacturing purchasing managers' index (PMI) in October was at 49.2, down from 49.6 in September, indicating that factory activities are shrinking.

Meanwhile, the producer price index (PPI) hit a record high, rising 10.7 per cent year on year in September, reflecting the higher costs industries face in making products. It raises the pressure to pass the higher costs to consumers, which may lead to worldwide inflation.

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