China鈥檚 President Xi Jinping (L) and Premier Li Keqiang (R) attend the opening session of the National People鈥檚 Congress (NPC) at the Great Hall of the People in Beijing on March 5, 2022. (Photo by Leo RAMIREZ / AFP)
BEIJING 鈥� China鈥檚 premier has sounded an unusually stark warning about the world鈥檚 second-largest economy, saying it must return to normal as the country鈥檚 zero-COVID strategy bites into growth.
China is the last major economy welded to a policy of mass testing and rapid lockdowns to eliminate virus clusters, but the strict curbs have battered businesses.
Restrictions on dozens of cities in recent months 鈥� including the manufacturing hubs of Shenzhen and Shanghai as well as the breadbasket of Jilin 鈥� have tangled supply chains and dragged economic indicators to their lowest levels in around two years.
In some ways, the challenges now are 鈥済reater than when the pandemic hit hard in 2020,鈥� Premier Li Keqiang told a State Council meeting on Wednesday, according to a readout by the official Xinhua news agency.
鈥淲e are currently at a critical juncture in determining the economic trend of the whole year,鈥� Xinhua quoted Li as saying.
鈥淲e must seize the time window and strive to bring the economy back onto a normal track.鈥�
Li鈥檚 remarks are the latest in a growing chorus of calls from officials and business leaders for more balance between stopping the virus and helping the ailing economy.
China鈥檚 retail sales plunged 11.1 percent on-year in April while factory output sank 2.9 percent 鈥� the worst showing since the early days of the Covid crisis.
And the urban unemployment rate edged back towards its February 2020 peak, challenging policymakers鈥� full-year growth target of around 5.5 percent.
In March and particularly in April, indicators such as employment, industrial production, electricity consumption and freight dropped 鈥渟ignificantly,鈥� Li said at the State Council meeting.
He stressed the importance of coordinating virus control and economic development, according to Xinhua.
Wilting growth
China鈥檚 current outbreak 鈥� fueled by the highly transmissible Omicron virus variant 鈥� is the worst since the early days of the pandemic in 2020.
Its biggest city and business hub Shanghai has been almost entirely sealed off since April, crushing businesses, while curbs are creeping in the capital Beijing.
READ: Shanghai partly resumes public transport in patchy reopening
The government has offered tax relief and a bond drive to help industries, and President Xi Jinping earlier called for an 鈥渁ll-out鈥� infrastructure push.
But analysts have cautioned that growth will keep wilting until China eases its rigid virus controls.
S&P Global Ratings this month lowered its full-year growth forecast for China from 4.9 percent to 4.2 percent due to Covid curbs.
And Nomura analysts warned in a recent note that there is 鈥渋ncreasing potential for negative GDP growth in the second quarter鈥�.
Wednesday鈥檚 State Council teleconference involved an unusually large cohort of provincial, city and county officials, Chinese outlet The Economic Observer reported.
The economic woes come in a pivotal political year for Xi, who is eyeing another term in power at the Communist Party Congress this autumn.
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