Most Main Economies Are Shrinking. Not China’s.

Zhang Shaobo, the owner of a Halloween mask factory in Yiwu, received news in March last year that one of his most consistent export customers in India had contracted the coronavirus. In May the man was dead. New customers from Mr. Zhang’s main markets in India and South America also stopped coming to China to view his latest products.

He fired all but four of his 20 factory workers and began making preparations to close his business in Yiwu’s wholesale market. Since the business is so weak, he said, “I’m not going to keep renting it.”

China’s top leader Xi Jinping paid tribute to the economic challenges in a speech published by Communist Party magazine Qiushi on Friday.

“There are profound adjustments in the international economy, technology, culture, security and politics, and the world is in a period of turbulent change,” Xi said in the speech delivered in August. “In the coming period, we will face an external environment with increasing headwinds and countercurrents and we must prepare to respond to a range of new risks and challenges.”

These challenges could get worse in the coming weeks. After notable success in taming the coronavirus, China has suffered a number of minor outbreaks recently. The government was quick to mobilize by building hospitals, running mass tests and banning at least 28 million people.

Updated

Jan. 18, 2021, 7:29 p.m. ET

Authorities are starting to reintroduce a variety of health checks that are deterring consumers from spending. Not everyone was doing well before the recent outbreaks. Consumer confidence never fully recovered in the past year. Chinese families have shown themselves to be particularly cautious when it comes to large expenses such as renovation projects or new furniture.

Retail sales growth declined in December, slowing from 5 percent in the previous month to 4.6 percent. Ning Jizhe, the commissioner of the National Bureau of Statistics, attributed this to the virus’s re-spread and said, “This has brought some uncertainty to the economy.”

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