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Will China’s growth rate slip into negative in the Oct-Dec period?

China's Covid challenge rising

Will China’s GDP economic growth get into the red? Analysts said that with more than 21 per cent of China’s economy now coming under lockdown, economic growth has been severely impacted in the October-December quarter and it could even go into negative.

The country’s central bank has sprung into action by reducing the reserve requirement ration – the amount of cash banks are mandated to hold with the People’s Bank of China – by 25 per cent to improve liquidity in the system. However, a Bloomberg report said that most economists opine that the policy measure will have little impact on the overall economic situation of the country.

A Normura analysts said that about 21.1 per cent of the country’s total GDP is currently under lockdown. A month ago, it was 9.5 per cent. What is even more worrying is that according to the report more than 30 per cent of China’s GDP will be under lockdown within the next couple of weeks.

“Supply chain has once again come under pressure which may further impact global economic activities,” a person with business interests in China told India Narrative.

“What policymakers could do now is to slow the spread of the virus – i.e. flatten the curve – by tightening the Covid controls for the time being,” Macquarie economists Larry Hu and Zhang Yuxiao said in a report, the South China Morning Post highlighted.

Also read: Hangover of zero-Covid norms hampers China’s bid to ease restrictions