What's going on?

Data out on Thursday showed that Chinese business activity fell last month, as the country�s government forces its own workers to clock off early.

What does this mean?

Just when Chinese companies thought they were back to business, a surge of Covid cases led to tighter restrictions across the country. That zero-tolerance attitude is having an impact: the latest business activity survey � which asks the country�s managers how busy their firms have been that month � showed that the services industry shrank last month. So did the manufacturing sector, which lost workers to quarantine and international customers to war-related belt-tightening. And the worst could be yet to come: Shanghai � home to the world�s biggest shipping container port � went into lockdown in late March, and economists think it could cripple the country�s companies for months to come.

Why should I care?

Zooming in: Savers are a drag.
It�s hardly a surprise that the services sector saw a drop-off: survey data out from the People�s Bank of China this week showed that 55% of respondents preferred saving money to spending or investing it last quarter � the highest proportion for almost 20 years (tweet this). That doesn�t bode well: consumer spending makes up more than half of China�s economy, so a drop in spending could stunt economic growth even more.

The bigger picture: China isn�t giving up.
At least China has a plan to get things back on track: the government said this week that it�s going to roll out measures to support the economy, including issuing more �special government bonds� to help fund infrastructure projects. Economists are also expecting the country�s central bank to cut interest rates, which should get the country spending again. It had better hope so: it�s aiming to grow its economy by 5.5% this year.