Chinese markets sink as lockdowns and inflation linger
Add Axios as your preferred source to
see more of our stories on Google.
Chinese stocks suffered their worst tumble in weeks Monday amid growing COVID-19 lockdowns throughout the country.
Why it matters: Lockdowns in China, a manufacturing behemoth, could weaken both its economy and the world’s, and add fresh snarls to global supply chains.
State of play: China has imposed a hard lockdown in Shanghai, a city of 25 million and a major economic hub, for roughly a month. Some now fear lockdowns could also spread to the manufacturing center of Guanzhou.
- Hong Kong's Hang Seng index sank 3% Monday and the Shanghai Composite fell 2.6%. (Though, they recovered some of those losses Tuesday.)
- Monday also brought fresh Chinese inflation stats, including the Producer Price Index for March. The index, which measures wholesale prices charged by Chinese factories, showed a higher-than-expected year-over-year increase of 8.3%, as lockdowns and international energy prices continued to push wholesale prices upward.
Background: Chinese stocks had been rallying in recent weeks, despite a worsening COVID-19 picture, as investors appeared to be betting that the government would be forced to print and spend money to shore up an economy that was locking down.
What we're watching: Higher-than-expected inflation, such as the kind detailed in Monday's data, could make Chinese policymakers leery of delivering the kind of help — fiscal spending and monetary easing — that they were able to offer in the early days of the virus.
Go deeper: U.S. orders all non-emergency government staff in Shanghai to leave
