China’s Economic Challenges

(1) Both the manufacturing and nonmanufacturing purchasing managers indexes contracted in March, dropping sharply below the 50.0 point that delineates contraction and expansion. Retail sales fell 3.5% y/y during March. During April, millions of people were confined to their homes in Shanghai.

(2) During April, the Covid lockdowns exacerbated the ongoing property market recession, which started late last year (remember Evergrande?). The top 100 developers saw new home sales volume and value growth plunge 61.2% and 58.6% y/y in April, according to China Real Estate Information Corp.