Xi’s zero-Covid policy sparks economic chaos in China

“The virus situation remains a risk,” said analysts at Capital Economics. “New infections have been climbing again. Even if the current outbreak is contained, the zero-Covid strategy means that targeted lockdowns will remain commonplace, depressing consumer activity and spending.

“The slow progress in expanding vaccination among the elderly means the zero-Covid policy won’t be abandoned any time soon.”

In a bid to calm markets, China’s central bank trimmed interest rates for the second time this year, despite fears of rising inflation. The People’s Bank of China cut two key lending rates, although Craig Botham, chief China Economist at Pantheon

Macroeconomics says the move will do little to support consumer spending, because there just isn’t any appetite to borrow.

“The People’s Bank of China cut interest rates [we] imagine because they felt like they had to be seen to do something, rather than because they think it will have much effect,” he says.

“Availability of funds is not the problem, loan demand is. Equally, the price of credit is unlikely to be the deciding factor, particularly with interbank rates so low.”

An even bigger worry is the growing number of young people who cannot find a job. A world where policymakers keep switching economic activity on and off has caused uncertainty among businesses. Many can’t be sure how many staff they’ll need today, let alone in a year’s time.

Around 11m Chinese graduates entered a very uncertain jobs market this year, which has pushed up youth unemployment to 19.9pc – the highest level in years.