Yahoo Finance Live’s Akiko Fujita breaks down the chart of the day.
AKIKO FUJITA: Taking a closer look at the Chinese economy ahead of key economic data this week, forecasters expect manufacturing activity in August to show slight growth, while retail sales are expected to remain weak. Both data prints are out on Friday. And this chart from the Atlantic Council's Geoeconomics Center shows how dramatically expectations around the Chinese economy have shifted as a result of its zero-COVID policy.
Now you want to take a look at the bottom line that the first part of that points to the growth expectations pre-COVID. That's the red to the right of the screen. A rate of more than 6% is what was expected there. Now forecasters have downgraded that to anywhere from 2.8% to 3.3%. That will put China well below the US growth rate.
The zero-COVID policy certainly has a lot to do with this with roughly 65 million people in more than 30 cities now being placed in full or partial lockdown because of the latest COVID cases. A slowdown in business activity certainly complicated by those historic droughts we've been talking about sweeping across parts of China, which have added to the pullback in manufacturing activity.