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Monday, 30 January 2023
How China’s Economy Is Affected by the Shanghai Lockdown

How China’s Economy Is Affected by the Shanghai Lockdown



As of late, China has been putting in extra time at work. The country’s economy has been on an upswing, with growth averaging 6.9% over the past five years. But this growth has come at a cost. Overwork and unrealistic production quotas have led to an increase in industrial accidents and a decline in employee morale. Now, workers are calling for a change. The government’s recent measures to combat overwork and improve employee morale have been slow to make an impact. However, the consequences of this problem are already being felt. China’s economy has become increasingly dependent on manufacturing, which means any slowdown will have major consequences. Here’s how China’s economy is affected by the Shanghai Lockdown.

China’s manufacturing sector is thriving

Over the past decade, China has transformed itself from a primarily agriculture based economy to an industrial powerhouse. Manufacturing now accounts for roughly 25% of the country’s economic output, up from 17% in 2005. The manufacturing sector grew rapidly as wages in China rose much faster than in other countries. And China’s rising income levels meant more people could be drawn into the workforce, providing even more demand for manufactured goods.

Overwork is a growing problem

The first sign of a problem may have appeared in 2010, when China’s labor force participation rate (LFPR) started to decline. At the time, the government said this was due to the country’s aging population. However, research suggests the LFPR was actually falling well before 2020. What’s more, the number of workers entering the workforce is still well below the level it was a decade ago. In fact, China has gone from being a country with a large working-age population to one with a large retired population in just a few decades.

Industrial accidents are on the rise


Over the same period, industrial accidents have also been on the rise, from 8.1 million in 2003 to a peak of 10.6 million in 2013. While industrial accidents are not unknown in any country, China’s rate is especially high by world standards. This suggests that, at the very least, Chinese factories are operating under dangerous conditions. More worryingly, it may also mean that safety standards are being compromised, with workers being exposed to toxic materials or dangerous machinery.

Rising wages are a potential problem

Rising wages have long been cited as a major reason behind the rise of the “intern economy” in China. While it is too soon to tell if and how wages will rise in the aftermath of the Shanghai Lockdown, one thing is clear—China is already experiencing a skills shortage. The problem is especially acute in the health sector, where hospitals are having difficulty finding enough staff. This could lead to longer waits for patients and increased mortality rates as patients are unable to wait for treatment in comfort.


The Shanghai Lockdown has had a significant impact on China’s economy, and the longer it continues, the more damage it could do. However, the government’s response to date has been slow, limited to issuing new rules for employee behavior. It remains to be seen if these will be enough to turn around the situation. In the meantime, China’s manufacturing sector is thriving, overwork is a growing problem, industrial accidents are on the rise, and wages are increasing. All of this suggests that the country is experiencing a manufacturing slowdown. If the Shanghai Lockdown persists for an extended period of time, it could have a devastating effect on the Chinese economy.

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