BEIJING, May 20 (Reuters) – China’s commercial hub of Shanghai on Friday reported a sharp decline in its economy last month when a citywide COVID lockdown shuttered factories and kept residents at home, prompting concerns among foreign companies about their presence in the country.
Output at Shanghai Industries, located at the heartland of manufacturing in the Yangtze River Delta, fell 61.5 percent in April from a year earlier, the local statistics bureau said.
That was worse than the 7.5% drop in March and was the biggest monthly drop since at least 2011.
Shanghai, where factories of companies such as Tesla and Semiconductor Manufacturing International Corp are based, accounts for 30% of China’s key auto component manufacturing and 40% of its chipmaking capacity.
As the number of COVID cases in Shanghai has fallen and the city of 25 million expects to normalize life in June, analysts say the impact of its lockdown is far-reaching, raising concerns about the China’s role in global supply chains, as many multinational companies may reassess their operational risks in China.
Even if the lockdown is lifted next month, restrictions on foreign travel by its citizens and the risk of further Omicron surges are causing uncertainty, representatives of the European Chamber of Commerce in China said during a meeting. a round table on Monday.
“Many companies and individuals are seriously considering their presence in China,” said Bettina Schoen-Behanzin, vice president of the chamber.
Shanghai’s retail sales in April plunged 48.3%, significantly sharper than the 11.1% decline nationwide and the city’s steepest decline since at least 2011.
This led to an overall decline in retail sales in the Yangtze River Delta, which fell by more than 30%.
Real estate sales by floor area fell 17% in January-April compared to growth of 4.0% in the first three months. In April alone, sales fell 88%, according to Reuters calculations based on four months of data. (Reporting by Ellen Zhang and Ryan Woo; Editing by Jacqueline Wong and Sam Holmes)