Shanghai's economy shrinks 61.5% in April due to COVID lockdown

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Shanghai's economy shrinks 61.5% in April due to COVID lockdown

BEIJING: The Chinese commercial hub of Shanghai reported on Friday a narrow decline in its economy last month when a city-wide COVID lockdown shut factories and kept residents at home, sparking concerns among foreign firms about their presence in the country.

The Shanghai industries' output, which is at the heart of the Yangtze River Delta, fell by 61.5 per cent in April from a year ago, according to the local statistics bureau.

It was worse than the 7.5 per cent drop in March and was the biggest monthly decline since at least 2011.

The plants of companies like Tesla and Semiconductor Manufacturing International Corp are located in Shanghai, which accounts for 30 per cent of China's key auto components manufacturing and 40 per cent of its chipmaking capacity.

While Shanghai's COVID 19 caseload has declined, and the city of 25 million people plans to normalise life in June, analysts say the spillover impact of its lockdown is far-reaching and raises concerns about China's role in global supply chains, as many multinational companies could assess their operational risks in China.

Even if the lockdown is lifted next month, restrictions on overseas travel of its citizens and the possibility of further Omicron flare-ups are raising uncertainty, said representatives from the European Chamber of Commerce in China during a roundtable on Monday.

Many companies and individuals are seriously considering their presence in China, said Bettina Schoen-Behanzin, the chamber's vice president.