Alarming decline in the Chinese economy following strict implantation of

Beijing: Effects of the strict implementation of the Zero COVID Policy by the Chinese government have started showing in the Chinese economy. During a meeting on Thursday, Chinese President Xi Jinping announced that the Zero COVID policy would continue under any circumstances. At the same time, he also indicated that the Chinese population would have to undergo Mass Testing once again in the coming times. This has been reflected in the Chinese market and there was a sharp decline in the stock indices and the value of the Yuan. There have been repeated outbreaks of Coronavirus in China in the last few months. To stop these outbreaks, China has implemented the Zero COVID policy. At the end of March, Lockdown was imposed in Shanghai, the second-ranked city in China. After that, restrictions have also been imposed in the capital Beijing since the last week. The implementation of the Zero COVID policy is also being done in ten cities other than Beijing and Shanghai. Some foreign investors and experts were claiming that these restrictions would be relaxed.

But on Thursday, President Jinping adopted an aggressive stand on the Zero COVID policy. Jinping announced that the Chinese government would implement the Zero COVID policy with full capacity to control the Coronavirus outbreaks. At the same time, he indicated stern actions against the people opposing it. The statements of Jinping increased the concerns of the investors in China. This concern was reflected in the stock markets on Friday. There was a decline of nearly 1.5% to 2.5% in China’s three leading stock markets. This also affected the value of the Yuan. The value of the Yuan against the USD declined to a 19-month low. Shocks delivered by the Zero COVID policy have been evident in the Chinese economy even before this crash in the stock market and Yuan value.

The index representing the growth of the service sector in China declined to 36.2. This is the second-lowest level in the history of the index. Some experts claim that this level indicates that the Chinese economy is in recession. Fitch Ratings, a leading international credit rating institution, has predicted a decline in the Chinese growth index to 4.3%. The European Chamber of Commerce has expressed displeasure that the foreign companies are being severely hit given the Zero COVID policy. Reuters, a leading international news agency, predicted a massive decline in Chinese imports and exports in April.

Only last month, China had announced the figures for the first quarter of the current fiscal. The figures showed a growth of 4.8% in the Chinese economy in the first quarter of 2022. This is a major setback compared to the target growth rate of 5.5% set by the ruling Communist regime for 2022.