Omicron is dealing a big blow to Chinas economy

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The Economist
By The Economist

For a timely take, analysts are turning to unconventional indicators

OMICRON MOVES fast. That makes it difficult to containeven for China, which tries to stomp promptly on any outbreak. A cluster of infections in Shanghai, for example, has shattered the citys reputation for deft handling of the pandemic, forcing the government to impose a staggered lockdown, of uncertain duration, for which it seems surprisingly ill prepared.

The variants speed also means that Chinas economic prospects are unusually hard to track. A lot can happen in the time between a data points release and its reference period. The most recent hard numbers on Chinas economy refer to the two months of January and February. Those (surprisingly good) figures already look dated, even quaint. For much of that period, there was no war in Europe. And new covid-19 cases in mainland China averaged fewer than 200 per day, compared with the 13,267 infections reported on April 4th. Relying on these official economic figures is like using a rear-view mirror to steer through a chicane.

For a more timely take on Chinas fast-deteriorating economy, some analysts are turning to less conventional indicators. For example, Baidu, a popular search engine and mapping tool, provides a daily mobility index, based on tracking the movement of smartphones. Over the seven days to April 3rd, this index was more than 48% below its level a year ago.

The Baidu index is best suited to tracking movement between cities, says Ting Lu of Nomura, a bank. To gauge the hustle and bustle within cities, he uses other indicators, such as subway trips. Over the week ending April 2nd, the number of metro journeys in eight big Chinese cities was nearly 34% below its level from a year ago. In locked-down Shanghai, where many subway lines are now closed, the number of trips was down by nearly 93%, a worse drop than the city suffered in early 2020.

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