Xi warms up China’s economy

Beijing: President Xi Jinping has offered state backing for tech, infrastructure and jobs to revive China’s economy, but analysts warn growth will continue to wilt until Beijing drops its rigid virus controls.

Two and a half years since the coronavirus first emerged in Wuhan, China is the last major economy still closed off to the world, despite its relatively low death toll. Lockdowns across dozens of cities -- from the manufacturing hubs of Shenzhen and Shanghai to the breadbasket of Jilin -- have wreaked havoc on supply chains over recent months, crushing small businesses and trapping consumers at home.

That has imperilled Beijing’s full-year growth target of about 5.5 percent, with forecasters anticipating that around one percentage point may be shaved off that figure. "We remain deeply concerned about growth," Nomura analysts said this week. "We believe the Omicron variant and zero-Covid strategy represent the dominant challenges to growth stability."

Yet China’s Communist leadership insisted Thursday that the country will stick "unswervingly" to zero-Covid, with a meeting chaired by Xi declaring that "persistence is victory".

To curtail the growing economic damage, Beijing has offered words of respite to the tech sector from rolling regulatory crackdowns and promised to pump prime the economy with an "all-out" infrastructure campaign.

But observers say rallies may be temporary as long as the state’s reflex remains to hammer down the virus caseload at all costs. "(The measures are) all very welcome... but how many more bridges and how many more sports stadiums are going to help us in creating an environment of predictable growth?" European Chamber president Joerg Wuttke told reporters on Thursday. While many cities have bounced back after short, targeted lockdowns, other areas such as agricultural base Jilin province have been slow to recover from waves of restrictions.