Chinese Officials Pained By Economic Fallout From Lockdowns

Chinese officials are grappling with the economic distress caused by their COVID-19 restrictions, as several cities remain in lockdown, according to the head of a European trade group, Michelle Toh, and Laura He reported for CNN Business.

Photo Insert: Chinese healthcare workers in PPE

Jörg Wuttke, president of the European Union Chamber of Commerce in China (EUCCC), said in an interview with CNN Business on Thursday that his latest conversations with the government had been encouraging as pressure built on Beijing to ease up on measures that have stifled economic activity and kept millions of people at home.

Last week, the World Bank (WB) slashed China's growth forecast, estimating that Chinese GDP would grow at 5% this year, sharply down from last year's 8.1%. That's also lower than the country's official target of about 5.5%.

"They are painfully aware of the damage to the economy. They're worried about unemployment. They're worried about foreign companies putting money elsewhere," he added, citing a private meeting with a Chinese ministry. He declined to name the agency.

China is the world's last major country still adopting a "zero COVID" policy, which aims to stamp out any sign of the virus through stringent quarantine and mobility restrictions. Since last month, full or partial lockdowns have been implemented in about 45 cities, according to estimates by Nomura. Those cities have around 373 million residents combined, accounting for a quarter of the population and about 40% of the economy.

This week, Chinese President Xi Jinping appeared to double down on that approach. "We must put people and lives first, prevent imported cases and domestic flare-ups, conduct a scientific, precise and dynamic zero policy, and implement all measures to prevent and control" the pandemic, Xi was quoted as saying Wednesday by state-run news outlet Xinhua.

However, the Chinese leader acknowledged that the country should take measures to minimize the impact "on economic and social development."

Wuttke estimates that China has already lost 50% of all European expats since the pandemic started. And there could be another exodus of families this summer when the school year ends, according to Wuttke.

"I wouldn't be surprised if another half of [those remaining] leave," he said. "It really depends."

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