A week of relaxation: Shanghai’s economy is getting bored

Status: 06/08/2022 13:05

China’s financial metropolis, Shanghai, was under a tight lockdown for two months. The easing has been in place for a week: the economy is expected to improve again. But what does this city really look like?

Ewa Lamby-Schmitt, ARD Shanghai Studio

Finally, by selling jianbing, or Chinese pancakes again, the seller, whose name remains anonymous for her protection, has been waiting for this moment in lockdown for two months. But a week after loosening, she’s sober. “Business is bad,” he says. “There are almost no customers. A lot of people who work in offices and buy something on the way or during their lunch break have not come back. “

Others are cautious and don’t dare to go back to the coffee shop or the gym right away, businessmen in Shanghai say. The two-month lockdown in Shanghai robbed the pancake seller of all income. Shanghai, the big city, was her hope when she came here. And he wants to stick to it. It came to the city from agriculture, which is a sign of increased mobility in China. He definitely doesn’t want to lose his business: “What should we do? Life goes on. We have no alternative. We don’t want to go back to the country.

Like her, she hit some in Shanghai. During the blockade, all stores, even supermarkets, were closed. Many business people say that three or four months without income is the absolute limit. After this, many probably would not be able to raise the shutters. Nevertheless, it is doubtful how many stores actually survived the strict lockdown in China’s largest and most modern city.

Less industrial production, less consumption

“Many stores will close because they can no longer pay rent or bills,” says a barber in Shanghai. Many would lose their employees. Low wages and younger workers are disappointed after closure and are leaving bigger cities.

The blockades in the financial and port metropolis of Shanghai and other Chinese cities have weighed heavily on the Chinese economy. Industrial production has fallen, consumption has fallen and unemployment has risen. Wang Dan is the chief economist at Hang Seng Bank in Shanghai and is closely following the development of the Chinese economy. It is particularly concerned that the greatest IT and financial talents are leaving Shanghai.

He does not believe that the government’s current economic resources will be enough to meet its 5.5% target. economic growth this year by the state and party leadership. “Most of the measures are aimed at providing businesses with liquidity and lowering taxes and fees to weather this extremely difficult period,” says Wang Dan. “But the final solution has to be with the demand side. At the moment, however, Chinese consumers and investors do not have the financial cushion to bear the expenses necessary to maintain high growth. ”

Blocks blocked again and again

German firms operating in China have also been hit hard by the blockades. Most of that time were not allowed to be produced at all. Even now, a week after the easing, we cannot speak of normality, says Jens Hildebrandt of the German Chamber of Foreign Trade in China: “In offices, 50 percent of employees are partially present, and companies continue to act cautiously as they fear there may be more lockouts.” .

In fact, in the days after Shanghai opened, individual apartment buildings and apartment blocks were closed again as more cases were discovered or suspected. According to the German Chamber of Commerce Abroad, many companies are still operating in a closed cycle. This means that workers continue to work, eat and sleep in the factories.

Supply chains can remain disrupted for months

This also applies to the world’s largest container port in Shanghai. However, according to the German Chamber of Commerce Abroad, work there is almost full again. This means that the ships can be handled again as before the blockade. Due to traffic jams on container ships, there is still a delay of about a week. In addition, shipping goods from other parts of the country to Shanghai port remains complex. “It usually takes weeks or even months to restore disrupted supply chains, and I think that’s the prospect for German companies in Shanghai.”, says Hildebrandt.

Uncertainty remains – for both multinational and local companies. Many fear blockers will keep coming back. “Local measures now change every three days. We are always on the alert, ”says a barber from Shanghai. “Nobody knows if the blockades will come back. I don’t think full blockade in the whole city will be back. But there is a good chance our buildings will be closed again. ”

Economic outlook after the Shanghai easing

Eva Lamby-Schmitt, ARD Shanghai, 8/6/2022 12:11

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