- Chinese Premier Li Kequiang said China's economy is worse off in some ways than it was when the pandemic first hit.
- "Economic indicators in China have fallen significantly," Li said Wednesday following a meeting with officials.
- Strict COVID-19 lockdowns have dramatically stalled business activities across China, impeding economic growth.
The yuan fell Wednesday after Chinese Premier Li Keqiang warned the world's second-largest economy is doing worse in some ways than when the pandemic first hit in 2020.
China's currency dropped 0.9% against the dollar, trading for nearly 6.72 yuan per greenback, after hitting an 18-month low against the dollar earlier this month.
"Economic indicators in China have fallen significantly, and difficulties in some aspects and to a certain extent are greater than when the epidemic hit us severely in 2020," Li said following a meeting with local officials and financial firms.
The warning comes as strict COVID-19 lockdowns have halted swaths of business activity across China. Retail sales and industrial production fell in April, and economists forecast the economy will grow by less than the government's target of 5.5% this year.
On Wednesday, Li suggested that even eking out growth in the current quarter may be a struggle. The last time China's economy hit negative territory was the first quarter of 2020, when the COVID-19 pandemic first hit.
"We will try to make sure the economy grows in the second quarter," he said, according to a transcript of his speech obtained by the Financial Times. "This is not a high target and a far cry from our 5.5% goal. But we have to do so."
Li listed a number of other red flags, noting that in some provinces only 30% of businesses have reopened while corporate liquidations soared above 23% in April. Many small and mid-sized businesses as well as local officials have told him "their worst days have come."
In addition, power generation, freight transport, and new bank loans all slipped in the first half of May, he said, according to the FT.