Amid the resurgence of COVID-19, China is likely to face another economic crisis, Bloomberg reported.
It is estimated that hundreds of millions of people in China may have been infected with COVID-19. Experts and businesspeople fear the country may be at risk of a financial downturn.
Beijing, Shanghai, Guangzhou, and Chongqing are gripped by the rapid spread of the virus. Traffic congestion levels across China’s 15 major cities dropped by 56% from January 2021, which is even worse than at the time of the spring lockdowns.
The National Health Commission predicts that daily coronavirus cases may surge to as many as 37 million. However, the latest data shows that new COVID-19 cases may have swelled by 18% to 284 million.
As the virus is tightening its grip on the country, China’s medical system is being pushed to its limits. People prefer to stay indoors more, taking no interest in traveling across the country. Experts fear that consumption and production in China may get seriously affected as a result. “The spike in Covid-19 infection rates following the easing of mobility restrictions will still constrain economic activity in the December-January time frame,” M&G Investments analyst Guan Yi Low said.
In early December 2022, experts suggested that the Chinese economy started to recover from COVID-19. Nomura strategists even claimed that the negative impact of China's Covid controls on its economy fell to 19.3% of its total GDP, for the first time since October.
Jesse Wheeler, an economic analyst at Morning Consult, believes that China may soon face serious risks for its economy and healthcare. “Many would-be consumers will likely stay home and forgo certain activities to avoid exposure to the virus,” he pinpointed.
China’s EPMI, one of the key indicators of business activity in high-tech sectors of the economy, plunged to 46.8 in December, illustrating a contraction. In November, the index came in at 52.2, reflecting an expansion of the Chinese economy.
