Risk of recession: 45 cities with GDP of Rs 55 lakh crore closed in China; drop in investment

Posted on 16th May 2022 by rohit kumar

The whole world has learned to live with Covid-19, but Chinese President Xi Jinping wants his country to function without it. China quickly won the first battle against Corona in Wuhan. Referring to the epidemic in Shanghai, the country's main business center, which has been stalled since March, Xi said last week that we will win in the struggle to save Shanghai. On the other hand, there has been increased pressure on China to change the zero-covid strategy.

 

Many companies in America, and Europe are considering shifting business

The World Health Organization has said that China's current epidemic policy will not work. An economist has described the situation as zero activity and zero GDP. MNCs are hesitant to make new investments in the country. Researchers have warned that if the virus remains uncontrollable, a tsunami of deaths could occur.

 

If the lockdown continues for a month, there may be a recession

 

According to an estimate, about 400 million population in 45 cities in China were under the shadow of some kind of lockdown and restrictions last month. The annual GDP of these cities is 55 lakh crore rupees. Economists are worried that the lockdown will have a bad effect on the growth rate. An economist says that if the lockdown continues for a month, then there may be a recession. Investors and businessmen think that the condition of the economy will worsen due to the zero-covid policy. Fred Hue, a prominent Chinese investor, said it was the right time for the government to change strategy. The economy will be ruined by the zero-covid policy.

 

More than 72% of people did not get the vaccine

 

The situation in China is expected to worsen because the rate of vaccination is low there. According to a study, less than half of people aged 70 or older in Shanghai have received both doses of the vaccine. According to health experts, about 72 percent of the people in the country have not been vaccinated. Instead of vaccination in dozens of infected cities, full force is being used to control the virus. Furthermore, the vaccines currently available in China are not as effective as foreign vaccines. Many Chinese companies are testing vaccines based on mRNA technology.

 

New measures to control the epidemic are stricter than before

 

China has recently approved the use of Pfizer's anti-viral pill Paxlovid. Foreign investment in China has almost come to a standstill. Some projects have been stuck for two years due to the restrictions of the pandemic. The movement of officers of foreign companies is closed. Michael Hart, president of the US Chamber of Commerce in China, says that China is silent on the appeals of executives of multinational companies. Here, some big leaders of China have started expressing concern over the economy. Prime Minister Li Keqiang has described the employment situation as dire. The new measures to control the epidemic are stricter than before.

 

In some places, people have protested against it. Demands for a change in the COVID-19 strategy are being pressed to quell discontent in a politically crucial year for President Xi. The government-controlled media is promoting an improvement in the situation.

 

Apple sales drop by 30-60 thousand crores due to the lockdown

 

European and American multinational companies say they are discussing ways to move some of their business out of China. Big companies dependent on China's large consumer market for good business have also raised alarm bells. Apple says, due to the lockdown, its sales may fall from 30 thousand crores to 60 thousand crores rupees. Howard Schultz, head of coffee chain Starbucks, says the company is not in a position to comment on the future status of its business in China.

Foreign investment in China has almost come to a standstill.

 

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