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Although China’s first-quarter economic growth of 4.4 percent this year matched the previous quarter’s expansion, most of that growth took place in January and February.
In March, the shutdowns began.
As Omicron cases began appearing, China slammed shut city after city, including tech hub Shenzhen and Shanghai, the country’s most populous city and home to the world’s busiest port.
Hundreds of millions of consumers are bunkered at home, while workers often have been forced to quarantine at their workplaces.
By 11 April, 87 of China’s 100 largest cities were under restrictions ranging from limits on who could enter or leave a city to people not being allowed to leave home, even to buy food, as in Shanghai.
As a result, consumer spending in March fell 3.5 percent from a year earlier and factory output slowed to a 5-percent growth rate, slower than the expansion in either January or February.
Even more metro areas were locked down this month, dimming China’s hope of attaining a 5.5-percent growth in GDP this year.
China’s slowdown is rippling around the globe, as the country imports less from other nations and retailers and manufacturers are unable to receive shipments.
“Shanghai is a hub for international car companies,” Cui Dongshu, head of the China Passenger Car Association, told The Wall Street Journal. “If the hub fails, the whole system won’t work.”
However, the freeze has yet to change U.S. investment banks’ plans to make Shanghai a hub for finance.
Goldman Sachs and JPMorgan Chase have transferred employees from Hong Kong to Shanghai in recent weeks.
Citigroup, Credit Suisse, Deutsche Bank, Morgan Stanley, and UBS also have announced plans to make Shanghai a center of new investment.
Goldman has been delivering food and other necessities to employees during the lockdown. Some have been quarantined at the bank’s offices, where they continue to do business.
China’s CNOOC oil company raised $4 billion through an initial public stock offering issued during the lockdown.
“We’re trying to build a 50-year business in China,” an unnamed Goldman employee told the Financial Times. “A disruption over several months isn’t enough to change the strategic thinking.”
TREND FORECAST: Even now, while the U.S. devotes its resources to geopolitical turmoil in Europe, the business of China remains business and Wall Street knows it. Only a wild card event will slow the momentum of Western companies planting roots in the world’s most populous country with the world’s fastest-rising economy.
The more Western countries that have offices in China, the less likely the U.S. and other Western nations are to take up arms against China if it attacks Taiwan.