The Covid-19 pandemic has dealt a severe blow to the Chinese economy, with some estimates suggesting that the country’s GDP could shrink by as much as 9% in 2020. This would be the first time that China’s economy has contracted since 1976.
The pandemic has hit China’s manufacturing sector particularly hard, with factory output falling to its lowest level in over a decade in November 2020. This has led to widespread layoffs and a sharp increase in unemployment.
The situation is even worse for shops and restaurants in Beijing, where retail sales have dropped by almost 18% in November 2020. Traffic congestion in the city is down by 70% compared to the same time last year.
China’s economy has been growing rapidly in recent years, but there are signs that the country’s economic expansion is starting to slow down. One of the most noticeable signs of this slowdown is the sharp drop in travel within the country.
According to BloombergNEF, the number of trips taken on the Beijing subway last Thursday was 70% below the level on the same day in 2019. Traffic congestion on the city’s streets was also down by 30%. Similar trends are being seen in other major Chinese cities such as Chongqing, Guangzhou, Shanghai, Tianjin and Wuhan.
There are a number of reasons why China’s economy is starting to cool down. One of the most important factors is the trade war with the United States. The two countries have been engaged in a tit-for-tat tariffs battle for over a year, and this has had a significant impact on China’s export-dependent economy.
Another factor that is weighing on China’s economy is the ongoing slowdown in the global economy. This has led to a decline in demand for Chinese goods and has put pressure on the country’s export sector.
Finally, the Chinese government has been trying to transition the economy from one that is driven by investment and exports to one that is more reliant on domestic consumption. This has led to a slowdown in infrastructure spending, which has in turn had a negative impact on economic growth.
Despite these challenges, China’s economy is still expected to grow by around 6% this year. This is still relatively strong growth, but it is significantly lower than the rates of expansion seen in previous years.