June 21, 2022
Chinese customers quickly recovered from the initial Covid-19 outbreak two years ago. There wasn’t a lot of economic distress back then. Only a few tiny geographic areas were affected, and life returned to normal after three months. The authorities is still fighting to contain the highly infectious omicron type two and a half months after a complete shutdown in Shanghai. It has recently halted and postponed the reopenings of Shanghai and Beijing.
Despite this, China has shown no signs of loosening its Covid-zero policy. In recent weeks, it has become standard practice in major cities to require regular PCR testing, with a negative result being required to ride the subway or even enter a store. In front of the testing booths, long lineups formed.
When Covid control grinds an economy to a halt for a long period of time, the result is unemployment. The term “layoff” has been rising on Baidu Inc.’s search engine in recent months. In May, urban unemployment in major cities reached 6.9%, the highest level since the National Bureau of Statistics began tracking unemployment in 2013. Young folks are particularly concerned. The unemployment rate among those aged 16 to 24 was 18.4%. According to online employment service Zhaopin Ltd, the average beginning wage for new college graduates who did receive job offers is 12 percent lower than a year before, at 6,507 yuan ($924) per month.
Source: Bloomberg
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