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29 September 2022
‘Zero Covid’ dampens Chinese commerce
Ongoing efforts to keep coronavirus infections at an absolute minimum in China through lockdowns are having a widespread impact on commerce in the country.
Why it matters
Viewed through the prism of the markets, as Bloomberg does here, the return of pent-up demand seen in other economies – and, indeed, in China back in the Spring of 2020 - hasn’t materialised two years on.
With restrictions tightening ahead of Golden Week, the dampening looks to be creeping into a wider slowing of the economy. However, China’s economy remains vast, and with its middle class continuing to grow there remains great potential both for local and international brands.
What’s going on
Effectively, people are now cutting back spending not only because of the coronavirus as wider macro issues like youth unemployment bite.
Retail sales in July, for instance, were down versus the same period last year.
Elsewhere, it appears investors and analysts have taken a grim view of central government encouragement of thriftiness, part of a long-running anti-graft effort under President Xi Jingping.
Between lockdowns and shifts in emphasis, luxury brands that had once done very well in China have struggled.