Economic activity in China falls

The November drop in economic activity in China was noted even before the Chinese government abruptly abandoned its zero-tolerance COVID-19 policy. However, a new decline is possible as the infection spreads further.

In November, the contraction in retail sales reached 5.9%, that is, it increased compared to the same period last year. That result was worse than the median forecast in a Bloomberg survey of economists, who had expected to see a 4% decline.

Industrial production growth fell to 2.2% from 5%. The unemployment rate rose to 5.7%, reaching a record high since May this year.

Raymond Yeung, a chief economist for Greater China at Australia & New Zealand Banking Group Ltd., noted China has already faced the first wave of infections since the easing of restrictions, so we should not expect the situation to improve in December.

According to economists, before the country's economy can recover in the second half of 2023, new shocks are possible in the coming months. Some experts have raised their estimates regarding GDP growth. This can be explained by rising spending by households and industries, as well as a likely increase in government stimulus.

In addition, the fact that the People's Bank of China has injected more cash than expected into the banking system may have an impact on lending growth in the country. The infusion amounted to 150 billion yuan ($22 billion).