Lockdown wipes out $46 billion a month from China's GDP

China's lockdown measures have been effective in preventing and controlling the epidemic, but the economy has paid a heavy price for it. Research in Hong Kong shows that the lockdown measures cost China at least US$46 billion (about 295 billion yuan) per month, equivalent to 3.1% of GDP. If Beijing, Guangzhou and Shenzhen also take such extreme measures, the national GDP will fall by more than 10%.

The economic team of the Chinese University of Hong Kong used the data of the positioning of nearly 2 million trucks in China to study and judge the impact of the city closure. Based on the fact that the cities that implement the city closure account for 20% of the GDP of mainland China, they believe that the city closure will cause China to lose at least 46 billion US dollars per month. It is equivalent to 3.1% of GDP. If more cities follow Shanghai's lead and implement tougher stay-at-home measures, the economic costs will multiply.

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Song Zheng, a member of the research team and a professor at the Department of Economics at CUHK, said that China's lockdown measures are tougher than other countries, and the economic cost is higher. The monthly loss of 3.1% of GDP is only a conservative estimate. If the impact on national inflation and supply are included The spillover effect of the chain will be more serious. A strict lockdown in Shanghai alone could reduce China's real GDP by 4%.

The closure of the city has led to the disappearance of the electronic logistics industry, and it is impossible for goods to be exported

Cai Mingfang, a professor at the Department of Industrial Economics at Tamkang University in Taiwan, believes that the closure of the city will affect domestic demand and cause a decline in output value. He cited Shanghai as an example.

Cai Mingfang: "The closure of the city in Shanghai has led to the disappearance of the entire electronic logistics industry. The port is directly affected, and it is impossible for the goods to be shipped. It is impossible for workers to commute to get off work normally. The real impact on economic output is here."

Shanghai will conduct sealing and nucleic acid screening in stages from March 28. Reuters quoted people familiar with the matter as saying that electric car company Tesla will stop production for four days at its Lingang plant. Cai Mingfang believes that the most worthy of attention this time is not Tesla itself, but its downstream enterprises.

Cai Mingfang: "There will be some satellite factories under Tesla. There are smaller cooperative factories under the satellite factories. These factories have a lower risk-taking ability. Once production is stopped, it will not be able to produce smoothly, which will lead to its cash flow. problems, resulting in operational difficulties or even bankruptcy.”

Lockdown raises doubts about China's determination to reform and open up

The commander, a Chinese financial scholar, worries that Shanghai's zoning measures will have far-reaching consequences.

Commander: "Not only does the city's information flow and logistics stagnate, but more importantly, Shanghai, as a window for China's reform and opening up, is now shutting down the entire city because of the city closure. It has to make people wonder whether China has the determination to reform and open up. It's also closed."

The economics team at the Chinese University of Hong Kong believes that if “Beijing, Shanghai, Guangzhou and Shenzhen” are to implement strict lockdowns together, the inflation-adjusted national GDP will drop by 12% during the lockdown. The scholar commander believes that if the four major Chinese cities take such extreme measures, the consequences will be disastrous.

Commander: "Beijing, Guangzhou and Shenzhen account for more than 3% of China's total GDP, although they are not as large as Shanghai's. The impact of China's GDP will be at least about 17%, and at least 15, 16 trillion yuan will be completely evaporated."

The commander said that Beijing, Shanghai, Guangzhou and Shenzhen have always been the investment hotspots in mainland China that can attract foreign investment and drive economic growth the most, but the zero-clearing policy may change everything.