China’s Covid curbs, droughts hit tourist sites and factory centers

(Bloomberg) – China’s Covid disruptions and extreme weather this summer have stunted the growth of several popular tourist spots and industrial hubs in the country, underscoring the fragility of the economy.

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At least eight provincial-level jurisdictions reported slower growth or tipped into contraction in the first nine months of 2022 compared to the first half, as Covid hampered businesses and a historic drought created an energy crisis.

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Thirty of mainland China’s 31 provincial jurisdictions have released their economic data for the first three quarters of the year, while Shaanxi has yet to release its data listed on its website.

One province reporting considerably lower numbers is Hainan, a tropical island that has seen China’s biggest Covid outbreak this summer since the one that triggered Shanghai’s lockdown, although daily case counts are much lower.

The gross domestic product of this province fell by 0.5% during the first nine months of the year, compared to a growth of 1.6% in the first half of the year. Retail sales on the tourism-dependent island fell 7.5% through September from a year earlier, after falling 5.9% in the January-June period.

The Covid outbreak in August “lasted longer than usual and affected a wider area than before, so it had a deeper impact on the economy of the province,” the provincial bureau of health officials said. statistics in a statement, citing its chief statistician Cheng Shaolin. The impact has been so profound because the local economy is dominated by service industries such as tourism, the office said.

Tibet and Xinjiang, two other popular tourist destinations, have also seen a sharp slowdown in growth. Tibet, for example, lost almost all of the 4.8% GDP expansion it recorded in the first half of the year, growing only 0.2% during the nine months. While summer is usually a peak travel season, rising Covid cases in both regions have prompted authorities to go into lockdown.

Sichuan and Chongqing provinces in southwestern China have also seen their economies deteriorate as a drought forced hydropower plants to cut power output and some factories to suspend operations.

The heatwave also created logistical hurdles in Chongqing, where traffic at one point plummeted almost as much as the slump seen in Shanghai during the lockdown.

The biggest laggard in the first three quarters of the year was Jilin, where GDP fell 1.6% between January and September. It was better than its 6% drop in the first six months, but the automotive and agricultural center has struggled to recover from a Covid outbreak and the ensuing lockdown that forced it into a strong contraction at the beginning of this year.

Shanghai’s economy shrank 1.4% in the January-September period. While still a contraction, it was a recovery from its 5.7% fall in the first half, after its two-month lockdown to contain a Covid outbreak.

Among the best-performing regions are Shanxi and Inner Mongolia in northern China, both of which are rich in energy resources. Shanxi saw its economy grow by 5.3% in the first three quarters – the highest rate of any province that reported – while Inner Mongolia grew by 5%.

Shanxi has “resolutely assumed political responsibility for a comprehensive energy province”, its statistics bureau said in a statement, adding that it was striving to fulfill its task of increasing energy production and ensure supply. Raw coal production in the province rose 10.5% in the first nine months from a year earlier.

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