China feels the heat of covid as its economy shrinks

Beijing: China is in deeper economic crisis than previously thought.

Now a report by news agency AP says China's economic growth plunged to 0.4 per cent in the last quarter.

More than slowing down, the world's largest economy shrank by 2.6 per cent, which is quite a shock for the Asian giant.

Compared with a year earlier, which can hide recent fluctuations, growth slid to a weak 0.4% from the earlier quarter's 4.8%, the report said.

The crisis comes mainly from the ruling communist party's zero-covid policy.

Major industrial hubs including Shanghai had been shut down asking residents to stay in for weeks, often leading to residents protesting against law enforcement.

These strict covid policies alongside a slew of other measures disrupted operations at the world's largest port in Shanghai alongside troubling manufacturing elsewhere in the nation.

The economy is shrinking nonetheless the government continues to claim a "stable recovery".

In late March China went hammer and tongs at controlling Covid 19 when the rest of the world was living with it, normalising the daily life.

Anti-virus controls got too extreme to the liking of the citizens, after the infected ones were asked to shut-in for weeks.

Thus millions of families were confined to their homes, AP report, depressing consumer spending.

Two months later in May offices began reopening again but economists say, according to the report, it will take weeks before things are back to normal.

Disruptions of shipping from China reportedly will affect its trading partners over the next few months, according to economists and business groups.

Chinese government is promising tax refunds and free rent to companies. Despite these sops, China will fail to hit its5.5% growth target this year.

In order to pump up economy, China is using targeted stimulus rather than "across-the-board spending. The strategy, according to the report, will take longer to show results.

Ruling communist party worries too spending might push up housing costs, which could be politically sensitive for China.

While rest of the world was struggling from covid crisis, China quickly rebounded from the pandemic in 2020. But thing went wrong after the second wave of covid that hit its major cities including Shanghai.