[Epoch Times, September 2, 2022](Epoch Times reporter Chen Ting comprehensive report) On Thursday (September 1), Chengdu, China suddenly fell into a blockade, which not only damaged local business and consumer activities, but also caused a nationwide concerns of people everywhere. Experts say the Chinese economy could suffer more as a result.
Chinese authorities have ordered a lockdown of the city of 21 million for at least four days, which could be extended further if more COVID-19 cases are detected, which could lead to a decline in retail and restaurant revenue. Factories and companies could be closed if employees are unable to go to work.
Although the authorities did not use the word “closed city”, residents of the city were required to “stay at home in principle”, were not allowed to enter or leave the community at will, and must undergo nucleic acid testing for all staff for four consecutive days.
Many fear this could be a repeat of Shanghai’s lockdown earlier this year. At the time, Shanghai, China’s main financial center, was only planning an eight-day lockdown and mass testing, but the lockdown was extended several times as the number of infections increased.
According to Bloomberg (link), Chengdu’s economy accounts for 1.7% of China’s gross national product (GDP), making it the sixth largest city in China after Beijing, Shanghai, Shenzhen, Guangzhou and Chongqing.
Chengdu, also the capital of Sichuan province, has been hit by severe heatwaves, droughts and floods in recent weeks. A power crisis caused by high temperatures forced some factories in Sichuan to temporarily close last month.
Bloomberg economist David Qu wrote in a note that Chengdu’s lockdown “would be another major blow to an economy already struggling with a series of shocks.”
While this is not as disruptive as the Shanghai lockdown in the spring, he said, “we expect this to have a broad impact on confidence, so that the damage to the economy is not limited to a direct hit to economic activity”.
Since the beginning of this year, Chengdu’s economic performance has been quite weak. Retail sales fell in the first seven months of the year, government revenue shrank and industrial output lost momentum. In the first six months of this year, Chengdu’s economy grew by just 3%, well below the 13.1% in the same period in 2021.
Chengdu is not the only major city in China currently under lockdown. The cities of Tianjin and Shijiazhuang near Beijing and Dalian in the northeast, as well as several districts in the southern manufacturing hub of Shenzhen, have announced strict epidemic prevention controls.
Shenzhen stepped up its COVID-19 control measures on Thursday, following Luohu, Futian and Longhua districts, the authorities announced that Nanshan District, where many high-tech companies are located, and Dapeng New District must implement global controls.
Lu Ting, an economist at Nomura Holdings, wrote in a report, “The hotspots of the epidemic are shifting from several remote areas and cities that appear to have less economic influence to provinces that are more important to China’s economy. “
Responsible editor: Ye Ziwei#