Shanghai’s Economy Plunged 61.5 Percent in April, Lockdown Caused Lack of Confidence in Industries: Expert

China Business & Economy

Shanghai’s Economy Plunged 61.5 Percent in April, Lockdown Caused Lack of Confidence in Industries: Expert

By Alex Wu
May 21, 2022 Updated: May 21, 2022
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Shanghai’s economy was hit hard in April by the nearly two-month lockdown. The latest data published by authorities shows that in April, the total industrial output in Shanghai dropped by 61.5 percent compared to the same time last year. An expert pointed out that the Chinese communist regime’s extreme lockdown of Shanghai under its “Zero-COVID” policy has crushed investors’ confidence.

According to the numbers released by the Shanghai Municipal Bureau of Statistics on May 20, the total output value of industrial enterprises in Shanghai in April 2022 was 128.617 billion yuan ($19.22 billion), a sharp plunge of 61.5 percent compared to the same period last year. The numbers for the first four months of this year show an annual decrease of 12.5 percent.

April’s data shows that only the total output value of the oil and natural gas industry had growth, and the rest of the industries had a steep decline. Among them, key industries such as automobile manufacturing decreased by 70.9 percent year-on-year, and the transportation equipment manufacturing industry decreased by 88.9 percent year-on-year. In addition, the newly started commercial housing development in Shanghai dropped by 47.1 percent from January to April, and the sales of commercial housing fell by 17 percent.

Epoch Times Photo Tesla’s China-made Model 3 vehicles are seen during a delivery event at its factory in Shanghai, China, on Jan. 7, 2020. (Aly Song/Reuters)

Taiwanese financial expert Henry Wu told The Epoch Times on May 20 that these economic figures show that the problem is very serious, and the consequences of Shanghai’s lockdown are too severe.

“Due to the COVID-19 pandemic, materials and parts cannot be shipped in. Inventories are running out. Even if products are made, they cannot be shipped out, and the companies have suspended production, so we see the economy plummet like an avalanche. The situations for manufacturing and service industry are the same. Economic data in many sectors have fallen sharply, indicating that many industries are basically unable to function normally,” he said.

Tesla’s Shanghai plant reported zero export of the Chinese-made models in April.

Wu said that now both Chinese and foreign companies are traumatized by the indefinite lockdown, and plan to evacuate and move to other countries “because they see that the regime’s measures to deal with the [pandemic] have reached absurd and inhumane levels.”

The released official data also shows that the total output value of Shanghai’s large industrial enterprises in April fell by 58 percent year-on-year, that of medium-sized industrial enterprises dropped by 57.7 percent year-on-year, and that of small industrial enterprises declined by 69.4 percent year-on-year.

Epoch Times Photo Employees work on the production line of Kent bicycles at Shanghai General Sports Co., Ltd, in Kunshan, Jiangsu Province, China, on Feb. 22, 2019. (Aly Song/File Photo/Reuters)

Regarding this, Wu said that large- and medium-sized enterprises can still hold up for a while, but the small enterprises may not have so much cash to keep them running. “They cannot afford the expenses of employees’ salaries and rent. If there is no revenue, no profits, and then no production activities, the spare funds will soon run out. So they won’t last.”

Wu believes that after Shanghai’s lockdown is lifted in the future, people will not dare to make long-term plans in Shanghai. “The resumption of production may have a little short-term effect, but it will not last and may cause new problems.”

He said that the current problem lies in the crisis of confidence. “Consumers’ and investors’ decisions are all based on confidence. The lack of transparency of the [Chinese regime’s] policies affects their confidence. The CCP system itself produces the economic crisis. The government’s power is unchecked, unsupervised, and there is no transparency and no stability. Everyone is scared by the extreme measure of the lockdowns. So they lost confidence in the system.”

Luo Ya contributed to the report.

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Alex Wu is a U.S.-based writer for The Epoch Times focusing on Chinese society, Chinese culture, human rights, and international relations.

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