China is facing a temporary hit to factory production and a lingering consumer slump amid the strictest COVID-19 controls since the initial outbreak two years ago.
Company statements and high-frequency indicators suggest a drop in output and spending in March after China imposed lockdowns in key cities like technology hub Shenzhen, and Changchun, a center for automakers. Official activity data won¡¯t be available for several more weeks.
With President Xi Jinping pledging to reduce the economic damage of his ¡°COVID zero¡± strategy, China has taken steps to end the shutdown in Shenzhen within a week and avoid putting Shanghai under full lockdown despite a flareup of COVID cases in the city. That suggests an attempt by officials to minimize the fallout, especially for factories.
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