Delta Blues: Consumer Recovery Stalls

China is now battling a resurgence of COVID-19 and its Delta variant, which has required a number of transportation restrictions to and from affected regions. Partial lockdowns in some cities could last longer than those during this year’s Chinese New Year holiday, with a greater corresponding impact on the economy. Production activities will probably remain on schedule given workers are already at factories, but the economic pain will be felt in household consumption and services industries, which employ around half of China’s labor force. High-frequency data already indicate transportation restrictions are clearly impacting population flows around the country. Economic disruptions are likely to continue into next year given China’s total COVID suppression strategy, as well as the tendency toward harsher locally-imposed restrictions as key dates loom on the political calendar in 2022.

Posted August 15, 2021
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