China’s economic growth has reached a new two-year low in the midst of an increase in Covid cases and a heat wave that has brought major cities to a standstill. China’s National Bureau of Statistics reported that the world’s second-largest economy grew by a meager 0.4% in the second quarter (April-June).
However, international experts dispute the report and contend that China’s economy may have contracted during the same time period. As President Xi Jinping has been absent from public view for over two weeks, the new report is anticipated to increase the pressure on him.
While countries around the world are opening their borders and economies in the wake of a pandemic, Beijing is enforcing its ‘zero-Covid tolerance’ policy with harsh measures.
The strategy is one of the primary reasons why China’s economic recovery has lagged behind. The Communist Party of China’s (CCP) strict lockdown measures resulted in a decrease in manufacturing for months, as factories and offices were closed for extended periods.
If the slowdown persists, China may see investors leave the country. Moreover, last year’s Evergrande scandal continues to damage China’s reputation abroad. Evergrande was once China’s crown jewel, but the company was soon exposed and is now on the verge of bankruptcy after owing more than $310 billion to banks and other creditors.
According to reports, China will also miss its economic growth target of 5.5% by the end of the year. If this occurs, it will be a rare occurrence and a direct result of the regime of Xi Jinping’s ultra-strict Covid policies.
