China's retail sales lowest in two years from Covid damage

China's retail sales slumped to its lowest in over two years while factory output plunged, official data showed Monday, capturing the dismal economic fallout from Beijing's zero-Covid policy.

The world's second-largest economy has persisted with strict virus measures, choking up supply chains as dozens of Chinese cities -- including key business hub Shanghai -- grapple with restrictions.

Officials have vowed to support growth, lowering the mortgage rate for first-time homebuyers and announcing Shanghai's gradual reopening last weekend but observers warn the zero-Covid strategy could mute any positive impact.

The latest cut came Monday when the National Bureau of Statistics (NBS) announced data showing that retail sales shrank 11.1 per cent on-year in April.

It is the biggest slump since March 2020 as Chinese consumers remained cooped up at home or jittery over lingering restrictions.

Industrial production growth also sank 2.9 per cent on-year, reflecting damage from shuttered factories and transportation woes as officials ramped up Covid restrictions last month.

This figure is the weakest since early 2020, and down from 5.0 per cent growth in March.

"In April, the epidemic had a big impact on economic operations," said the NBS in a statement, stressing that the hit would be "short-term".

The weak numbers came as China battles its worst Covid outbreak since the early days of the pandemic.

In April, unemployment similarly rose to levels not seen since early 2020, according to NBS data, as the urban unemployment rate hit 6.1 per cent.