China

Shanghai Factory, Retail, Property Sectors Pulverised by Lockdown

Shanghai's economy was hammered by the Covid lockdown in April. Here, a man buys food from a vendor behind barricades of a sealed-off area, during the Covid outbreak. File photo: Reuters.

Industrial output in Shanghai plummeted by more than 61% in April when a strict city-wide lockdown was imposed by local authorities, the local statistics bureau said.

Shanghai is the country’s commercial hub, but with factories shut and citizens stuck at home, the fall in output was the biggest decline in over a decade and far worse than the 7.5% drop in March.

The city’s retail sales also nosedived by 48.3% in April, significantly steeper than the 11.1% drop nationally and the city’s largest decline since at least 2011.

That dragged down overall retail sales in the Yangtze River Delta, which plunged over 30%.

Property sales by floor area decreased 17% in January-April versus growth of 4.0% in the first three months. In April alone, sales sank 88%, according to calculations based on the four-month data.

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Reopening Soon, But Fears Remain

The city, which has high-profile companies such as Tesla and Semiconductor Manufacturing International Corp, accounts for 30% of China’s key auto components manufacturing and 40% of its chipmaking capacity.

Shanghai’s Covid caseload has declined, and the city of 25 million plans to normalise life in June, but analysts say the spillover impact of its lockdown is far-reaching.

Concern has been raised about China’s role in global supply chains as multinational companies currently based there may reassess their operational risks in the country. There has been a sharp rise in the number of expatriates wanting to get out of the city.

Even if the lockdown is lifted next month, curbs on overseas travel of its citizens and the risk of further Omicron flare-ups are stirring uncertainty, representatives from the European Chamber of Commerce in China said during a roundtable on Monday.

“Many companies and individuals are seriously considering their China presence,” Bettina Schoen-Behanzin, the chamber’s vice president said.

Officials at the American Chamber of Commerce voiced similar fears recently.

• Reuters with additional editing by Jim Pollard