China’s economic woes mount amid zero-COVID lockdowns

Companies and investors unsure about how government plans to meet what analysts say are contradictory targets as it balances zero-COVID and growth.

A long-time China investor’s declaration that the Chinese economy was “in the worst shape in the past 30 years” has underlined growing concerns over growth amid Beijing’s continued emphasis on harsh COVID-19 lockdowns.

Those fears have deepened following latest data, released over the weekend, showing a slowdown in manufacturing and services to a two-year low.

The ruling Communist Party’s Politburo met on Friday and pledged a slew of policies to support embattled sectors, from real estate to tech, which had already been reeling from regulatory interventions by the Xi Jinping government before the latest spread of Omicron cases and widening lockdowns.

The Politburo meeting, at the same time, said the country would follow the stringent “zero-COVID” approach favoured by President Xi.

That has left companies and investors unsure about how the government plans to meet what some analysts say are contradictory targets as it balances zero-COVID and growth.

Rare comments that emerged this past weekend from prominent investor Weijian Shan, chairman of Hong Kong private equity firm PAG and a major investor in China who has broadly been positive about the economy, portrayed a dire picture of the current situation in a private video with investors. This reflected the sentiment among many firms who are reluctant to publicly voice their concerns, according to observers in Hong Kong and Beijing.

The economy was “in the worst shape in the past 30 years,” he said in the private video, obtained by the Financial Times, adding that the market sentiment as well as public discontent were also in the worst state in three decades.