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The Economic Impacts of COVID-19 and City Lockdown: Early Evidence from China

Author

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  • Jianxin Wu
  • Xiaoling Zhan
  • Hui Xu
  • Chunbo Ma

Abstract

China adopted the world’s most stringent lockdown interventions to contain the COVID-19 spread. Using macro- and micro-level data, this paper shows that the pandemic and lockdown both had negative and significant impacts on the economy. Gross regional product (GRP) fell by 9.5 and 0.3 percentage points in cities with and without lockdown, respectively, representing a dramatic recession from China’s average growth of 6.74% before the pandemic. The results indicate that lockdown explains 2.8 percentage points of the GDP loss. We document significant spill-over effects the pandemic but no such effects of lockdown. Reduced mobility, land supply, and entrepreneurship are significant mechanisms underpinning the impacts. Cities with higher share of secondary industry, higher traffic intensity, smaller population, lower urbanization, and lower fiscal capacity suffered more. However, these cities have recovered well and quickly closed the economic gap in the aftermath of the pandemic and city lockdown.

Suggested Citation

  • Jianxin Wu & Xiaoling Zhan & Hui Xu & Chunbo Ma, "undated". "The Economic Impacts of COVID-19 and City Lockdown: Early Evidence from China," Working Papers 329094, University of Western Australia, School of Agricultural and Resource Economics.
    • Handle: RePEc:ags:uwauwp:329094
    DOI: 10.22004/ag.econ.329094
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    2. Li, Qi & Yuan, Zhiting & Tao, Ran, 2024. "The political economy of COVID-19 in China," China Economic Review, Elsevier, vol. 85(C).
    3. Jun-Chao Ma & Zhi-Qiang Jiang & Yin-Jie Ma & Yue-Hua Dai, 2023. "Community Structure and Resilience of the City Logistics Networks in China," Mathematics, MDPI, vol. 11(20), pages 1-15, October.
    4. Feng, Qianqian & Shen, Yiran & Li, Jianping & Sun, Xiaolei, 2025. "Inter-industry risk spillovers in the Chinese stock market under epidemic outbreaks," Journal of Behavioral and Experimental Finance, Elsevier, vol. 46(C).
    5. Zhang, Hua & Lai, Jie, 2024. "Greening through ESG: Do ESG ratings improve corporate environmental performance in China?," International Review of Economics & Finance, Elsevier, vol. 96(PC).
    6. Zhou, Zhanhang & Zeng, Chen & Li, Keke & Yang, Yuemin & Zhao, Kuokuo & Wang, Zhen, 2024. "Decomposition of the decoupling between electricity CO2 emissions and economic growth: A production and consumption perspective," Energy, Elsevier, vol. 293(C).
    7. Woraanong Thotongkam & Thanapong Champahom & Chartaya Nilplub & Warantorn Wimuttisuksuntorn & Sajjakaj Jomnonkwao & Vatanavongs Ratanavaraha, 2023. "Influencing Travelers’ Behavior in Thailand Comparing Situations of during and Post COVID-19," Sustainability, MDPI, vol. 15(15), pages 1-23, July.
    8. Pick, James B. & Ren, Fang & Sarkar, Avijit, 2025. "Social media access and purposeful use in China: Geospatial patterns and socioeconomic and COVID-19 influences," Telecommunications Policy, Elsevier, vol. 49(7).
    9. Migyeong Yang & Soobin Jang & Michelle Goh & Daeho Lee, 2024. "The effects of working from home on technical efficiency within the service industry: A meta‐frontier approach," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 45(4), pages 2189-2195, June.
    10. Duan, Haoran & Yu, Shiwei & Geng, Haopeng & Cheng, Jinhua, 2025. "Economic vulnerability and resilience analyses for China's iron and steel industry: Insights from COVID-19," Resources Policy, Elsevier, vol. 103(C).

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    JEL classification:

    • I18 - Health, Education, and Welfare - - Health - - - Government Policy; Regulation; Public Health
    • R11 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Regional Economic Activity: Growth, Development, Environmental Issues, and Changes
    • R38 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location - - - Government Policy

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