Chinese markets sink as lockdowns and inflation linger
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.