China’s Covid curbs, droughts hit tourism, and factory hubs
CHINA’S Covid disruptions and extreme weather this summer dragged on growth for several of the country’s popular tourist spots and factory hubs, underscoring the economy’s fragility.
At least eight provincial-level jurisdictions reported slower growth or flipped into contraction in the first nine months of 2022 compared to the first half as Covid hampered businesses and a historic drought created an energy crisis.
Thirty of mainland China’s 31 provincial-level jurisdictions have published their economic data for the first three quarters of the year, while Shaanxi hasn’t yet posted listed its data on its website.
One province reporting dramatically weaker figures was Hainan, a tropical island that this summer experienced China’s biggest Covid outbreak since the one that spurred Shanghai’s lockdown, though the number of cases per day was far lower.
Gross domestic product (GDP) in that province shrank 0.5 per cent in the first nine months of the year, compared with growth of 1.6 per cent in the first half of the year. Retail sales on the tourism-dependent island dropped 7.5 per cent through September from a year earlier - worsening from a 5.9 per cent fall in the January-June period.
The Covid outbreak in August “lasted longer than usual and affected a wider area than before, so it had a deeper impact on the province’s economy”, the provincial statistics bureau said in a statement, citing its chief statistician Cheng Shaolin. The impact was so deep because the local economy is dominated by services industries such as tourism, the bureau said.
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Tibet and Xinjiang, two other popular tourist destinations, also saw sharp slowdowns in growth. Tibet, for example, lost nearly all of the 4.8 per cent expansion in GDP it recorded in the first half of the year, growing just 0.2 per cent in the nine-month period. While summer is usually a peak travel season, surging Covid cases in both regions prompted authorities to lock down.
Sichuan and Chongqing provinces in southwestern China also saw their economies worsen as a drought forced hydropower plants to cut electricity output and some factories to suspend activity.
The heatwave also created logistical hurdles in Chongqing, where traffic at one point dropped by almost as much as the slump seen in Shanghai during the lockdown there.
The biggest laggard in the first three quarters of the year was Jilin, where GDP fell 1.6 per cent in the January-to-September period. That was better than its 6 per cent plunge in the first six months, but the automotive and farming hub has struggled to recover from a Covid outbreak and ensuing lockdown that forced it into a steep contraction early this year.
Shanghai’s economy shrank 1.4 per cent in the January-September period. While still a contraction, that was a recovery from its 5.7 per cent plunge in the first half of the year, after its two-month lockdown to contain a Covid outbreak. It will take a while for the city’s economy to recover from the effects of the lockdown - in the July-September period, industrial output increased 14.9 per cent from a year earlier, but retail sales only rose 1 per cent, which is well below pre-pandemic rate of expansion.
Among the best-performing areas were Shanxi and Inner Mongolia in northern China, both of which are rich in energy resources. Shanxi saw its economy expand 5.3 per cent in the first three quarters - the highest rate among all provinces which have reported - while Inner Mongolia grew 5 per cent.
Shanxi has “resolutely shouldered the political responsibility of a comprehensive energy province”, its statistics bureau said in a statement, adding that it pushed to fulfil its task of increasing energy production and ensuring supply. Raw coal output in the province rose 10.5 per cent in the first nine months from a year earlier. BLOOMBERG
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