China's economy shrinks 2.6 per cent; experts say it won't meet growth target

The data comes at a time when serious questions are being posed about the sustainability of the country's real estate sector and the credibility of its banking sector. China's National Bureau of Statistics said that the 'resurgence' of the pandemic was effectively contained and that the 'national economy registered a stable recovery'. 

China's economic growth plunged to 0.4 per cent in the latest quarter, compared to 4.8 per cent in the earlier quarter. The Covid virus outbreaks in Shanghai and other cities, which forced them to be locked down completely, are being viewed as the main reason for the downturn. 

The data comes at a time when serious questions are being posed about the sustainability of the country's real estate sector and the credibility of its banking sector. Beijing tried to play down the quarter result, stating that a 'stable recovery' is underway. 

China's National Bureau of Statistics said that the 'resurgence' of the pandemic was effectively contained and that the 'national economy registered a stable recovery'.

Official data showed that the Chinese economy shrank in the last quarter by 2.6 per cent when compared with the January-March period's already weak quarter-on-quarter rate of 1.4 per cent. Growth slid from the earlier quarter's 4.8 per cent to a weak 0.4 per cent.

Economists say that, at this rate, China will not meet the 5.5% growth target set by the ruling Communist Party this year.

Beijing adopted a non-compromising stand on its zero-Covid policy, clamping lockdowns and quarantines in cluster zones. However, this meant that businesses came to a grinding halt. According to the National Bureau of Statistics, the pandemic resurgence disrupted supplies and shrunk demand.

In a statement, the National Bureau of Statistics also blamed growing external uncertainties for the downturn. It underlined that the risk of stagflation in the world economy was on the rise.