China’s Covid-battered economy slumped in November before its leaders abruptly eased pandemic restrictions, paving the way for a reopening that economists say will be bumpy and painful.
On Thursday, a series of indicators pointed to a slowdown in economic activity last month. Retail sales declined 5.9% in November from a year ago, according to the National Bureau of Statistics. It was the worst contraction in retail spending since May, when widespread Covid lockdowns, including in the country’s richest city Shanghai, pummeled the economy.
Industrial production only increased 2.2% in November, less than half of October’s growth.
Investment in the property sector, which accounts for as much as 30% of China’s GDP, plunged by 9.8% in the first 11 months of the year. Property sales by value plummeted by more than 26%.
Unemployment worsened, rising to 5.7% last month, the highest level in six months.
“In November, Covid outbreaks spread to most parts of the country, forcing residents to cut travel and stay at home, which hit consumption heavily,” Fu Jiaqi, a statistician at the NBS, said in a statement on Thursday accompanying the data release.
He noted that consumption activities involving personal interaction, for example travel or dining, were greatly affected. Catering sector revenues declined 8.4% last month.
Sales of big-ticket items — such as cars, furniture, and high-end consumer electronics — also contracted sharply, as consumers were wary of spending amid worries about a weak economy. Spending on household appliances and telecoms devices plunged more than 17%. Car sales dropped over 4%.
External trade was also weak. Last week, customs data showed the country’s exports contracted 8.7% in November from a year ago, the worst performance since February 2020. That figure was much lower than most economists had expected.
November’s economic slump happened before Beijing abruptly eased its repressive pandemic restrictions earlier this month. Top leaders signaled at an important political meeting last week that they will shift focus back to growth and seek a turnaround of the economy next year.
China’s economy has been battered by its stringent zero-Covid policy and persistent property woes this year. Growth is forecast to hit around 3% in 2022, one of the lowest levels since 1976, the year when former leader Mao Zedong’s death ended a decade of social and economic tumult.
On Wednesday, two of the country’s top ruling bodies, the Central Committee of the Communist Party and the State Council, issued a strategic plan to expand domestic demand and stimulate consumption and investment until 2035. It cited rising external risks, including global economic and geopolitical uncertainties.