Beijing’s economy was slammed in May as it contended with Covid outbreaks, a sign that government curbs to contain the virus still had a significant impact even though it managed to avoid a citywide lockdown like Shanghai’s.
Retail sales in the city fell about 26% in May from a year earlier, data from the municipal statistics bureau showed. That’s worse than any other provincial-level jurisdiction that has published monthly data so far except for Shanghai, where spending plunged some 37%.
Workers wear protective equipment before entering a neighborhood placed under lockdown in Beijing, on May 31. (Photo: Bloomberg)Industrial output in the capital city dropped nearly 40% in May, worse than Shanghai’s almost 28% drop. Beijing blamed the decline on the Covid outbreaks and a high base from last year, according to a statement from the statistics bureau. Shanghai benefited from central government encouragement to keep factories running during the lockdown.
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About 14 of China’s 31 provinces and cities have published some May activity data so far, with economic powerhouses including Jiangsu and Guangdong yet to release their figures. The data are based on government statistics and on calculations by Bloomberg News.
The figures suggest that while Beijing didn’t impose a hard lockdown that confined every resident to their homes in the way Shanghai did, the capital’s own strict virus curbs still dealt a heavy blow to the economy. Beijing has rolled out mandatory Covid testing for many residents, business closures and sporadic lockdowns to contain virus flare-ups, depressing consumer spending and other economic activity.
Beijing and Shanghai contribute a sizable portion of the nation’s gross domestic product: 3.5% and 3.8%, respectively, in 2021. That makes any prolonged economic downturn a major concern for a country that has targeted growth of about 5.5% for this year. Many economists think China will miss that target, with the median estimate at 4.3% growth for 2022.
Already there was some improvement in Shanghai in May, where lockdown measures were gradually eased ahead of June’s reopening. While the economy stayed in contraction, the decline in industrial output narrowed from a 62% drop in April, and the decline in retail sales was smaller than April’s 48%. However, both Shanghai and Beijing walked back the unraveling of some restrictions in June to contain Covid outbreaks.
The economic downturn has also stretched to fixed-asset investment in Beijing, which grew only 2.8% from January to May -- far behind the 6.2% national increase. That was also the second-worst reading among the economies that published data so far, behind Shanghai, which saw investment plummet 21.2% in the period.