China’s retail sales fell for a third straight month in May as lockdowns and mass testing campaigns under President Xi Jinping’s zero Covid strategy dampened growth in the world’s biggest consumer market .
Retail sales, an important indicator of consumption, fell 6.7% from the same month a year ago. As the pace of decline slowed from April, the grim data marked the latest indicator of how China has struggled to revive consumer spending due to the ever-present threat of lockdowns.
Sheana Yue, China economist at Capital Economics, warned of a “risk of relapse” amid increased restrictions and slowing external demand.
“Even if further prolonged citywide lockdowns like Shanghai’s are avoided, the zero-Covid strategy means targeted lockdowns will remain commonplace, depressing consumer activity and spending,” he said. she declared. “The recovery of consumer activity has even further to go than that of industry.”
China’s industrial production, which measures the output of the country’s mining, factory and utility sector, rebounded slightly in May, gaining 0.7% from the same period a year ago.
Factory output was supported by robust growth in the production of new energy vehicles and solar cells.
According to data from the Chinese National Bureau of Statistics, online car and goods sales, as well as food and beverage sales by large companies, have improved, but the gauge has been dragged down by sharp declines in spending on food and clothing.
In recent days, large swaths of Shanghai, China’s most populous city, as well as parts of the capital Beijing have been forced to undergo mass testing.
The orders, which were issued just days after Shanghai emerged from a months-long lockdown, served as a reminder that Xi’s anti-virus strategy of mass testing, rapid lockdowns and strict quarantine remains a higher priority. than economic growth.
Despite a seven-day average daily case count of around 200, down from a peak of around 30,000 in April, most major Chinese cities have instituted regular Covid testing regardless of symptoms.
As of Monday, around 68 million people were under at least district-based control measures, with six cities implementing full or partial lockdowns, according to an analysis by Nomura. The pandemic situation has worsened “nationally” for the first time since mid-April, bank analysts said.
Nomura analysts also pointed out that during a visit to southern China’s Sichuan province this month, Xi “once again reiterated that perseverance is victory.”