COVID Lockdowns Hit China's Economy Hard

China has posted troubling economic data for April, revealing the severe damage COVID lockdowns have wreaked on the country.

The world's second largest economy reported alarming drops in retail sales and manufacturing production, falling short of many market predictions.

Retail sales fell 11% in April from a year ago. Industrial production fell 2.9% last month from a year earlier. The urban unemployment rate climbed to 6.1% in April, up from 5.8% in March. China's joblessness rate was only higher in February 2020, at the beginning of the pandemic.

So far, over 30 cities in the country remain under full or partial lockdown. Shanghai, the country's financial heartbeat and manufacturing hub, has been under lockdown for over six weeks. 

Many large companies have been forced to suspend operations, including carmakers Tesla and Volkswagen, as well as iPhone assembling company Pegatron.

Analysts believe China’s second quarter growth could even turn negative, a frightening prospect for a country accustomed to unending economic growth.

What does this mean for me? 

COVID-19 may have retreated into the shadows of many newsrooms, but when a major outbreak flares up, as it has done in China, the pandemic retains the ability to be very disruptive.

If you have any investments in Asian assets, you can expect the ongoing effects of COVID-19 lockdowns in China to have regional implications.

Some Asian markets are already showing weak data, with Hong Kong's Hang Seng, China's Shanghai Composite, and Korea's Kospi all down between 0.3% and 0.5% in the last week.