Record Covid cases cast a pall on China’s wellbeing

Beijing — China reported a record number of Covid-19 infections on Thursday, with cities nationwide imposing localised lockdowns, mass testing and other curbs that are fuelling frustration and darkening the outlook for the world’s second-biggest economy.

The resurgence of infections, nearly three years after the pandemic emerged in the central city of Wuhan, casts doubt on China easing its strict zero-Covid policy soon, despite recent more targeted measures.

The curbs are taking a toll on locked-down residents and on output at factories, including the world’s biggest iPhone plant, where workers and security personnel have clashed in a rare show of dissent.

“How many people have the savings to support them if things continually stay halted?” asked a 40-year-old Beijing man surnamed Wang who is a manager at a foreign firm. “And even if you have money to stay at home every day, that's not true living.”

The streets of Chaoyang, the capital’s most populous district, have been increasingly empty this week.

Sanlitun, a high-end shopping area, was all but silent on Thursday except for the whirring of delivery riders' e-bikes ferrying meals for those working from home.

Brokerage Nomura cut its China GDP forecast for the fourth quarter to 2.4% year on year from 2.8%, and cut its forecast for full-year growth to 2.8% from 2.9% — far short of the official target of about 5.5% this year.

“We believe reopening is still likely to be a prolonged process with high costs,” Nomura wrote, and also lowered its China GDP growth forecast for next year to 4% from 4.3%.

The country’s leaders are sticking to President Xi Jinping’s zero-Covid policy, even as much of the world tries to co-exist with the virus, saying it is needed to save lives and prevent the medical system from being overwhelmed.

Acknowledging pressure on the economy, state media on Wednesday reported that officials would use timely cuts in bank cash reserves and other monetary policy tools to ensure sufficient liquidity. That could the reserve requirement ratio (RRR) may be cut soon.

Widespread outbreaks

Wednesday’s reported 31,444 new local Covid-19 infections exceeded those on April 13, when the commercial hub of Shanghai locked down its 25-million residents for two months.

This time, however, big outbreaks are far-flung, with the biggest in the southern city of Guangzhou and southwestern Chongqing, though hundreds of new infections are reported daily in cities such as Chengdu, Jinan, Lanzhou and Xian.

While official case tallies are low by global standards, China tries to stamp out every infection chain.

Authorities recently eased some rules on mass tests and quarantine, as they aim to avoid catch-all measures such as citywide lockdowns like the one in Shanghai.

Cities have been using more localised and often unannounced lockdowns. recently Many people in Beijing said they had received notices about three-day lockdowns of their housing compounds.

The far northeastern city of Harbin announced lockdowns of some areas on Thursday.

Many cities have returned to mass testing, which China had hoped to cut back as costs rise. Others, including Beijing, Shanghai and Sanya on the resort island of Hainan have limited the movement of recent arrivals.

Nomura estimates that more than a fifth of China’s GDP is under lockdown, a share bigger than the British economy.

“Shanghai-style full lockdowns could be avoided, but they might be replaced by more frequent partial lockdowns in a rising number of cities due to surging Covid case numbers,” Nomura analysts wrote.

The central city of Zhengzhou, where workers at the massive Foxconn factory that makes iPhones for Apple staged protests, announced five days of mass testing in eight districts, becoming the latest city to revive daily tests for millions of residents.

Reuters