As the economic outlook darkens, China’s Covid infections break records.
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As the economic outlook darkens, China’s Covid infections break records. China reported a record-high number of COVID-19 infections on Thursday, with cities imposing nationwide local lockdowns, mass testing and other restrictions that have fueled frustrations and concerns about the world’s second-largest economy. So they are darkening the view.
A resurgence of infections nearly three years after the pandemic emerged in the central city of Wuhan has cast doubt on investors’ hopes that China will soon ease its strict zero-COVID policy, despite recent more targeted measures.
The restrictions are affecting residents of the lockdown as well as production at factories, including the world’s largest iPhone plant, which has seen clashes between workers and security officials in an unusual display of dissent. Shaken from.
“How many people have the savings to support them if things continue to stagnate?” asked a 40-year-old Beijing man surnamed Wang, a manager at a foreign firm.
“And even if you have money to live at home every day, that’s not real life.”
Read more: Chinese cities double down on zero-COVID as outbreak spreads
The streets of Chaoyang, the capital’s most populous district, are increasingly empty this week.
Sunleyton, an upscale shopping area, was almost quiet on Thursday but for the buzz of delivery riders on e-bikes carrying food for home workers.
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%. , which is well below China’s official target of 5.5. % this year.
“We believe reopening is still likely to be a long process with high costs,” Nomura wrote, cutting China’s GDP growth forecast for next year to 4.0 percent from 4.3 percent.
China’s leadership has stuck by zero-covid, a signature policy of President Xi Jinping, even as most of the world tries to keep up with the virus, saying it saves lives and overwhelms medical systems. It is needed to prevent
Recognizing the pressure on the economy, the cabinet said China would use timely cuts in bank cash reserves and other monetary policy tools to ensure sufficient liquidity, state media said on Wednesday, signaling that the reserve requirement A reduction in the ratio (RRR) may come soon. .
China stocks fell on Thursday, as concerns about daily cases of COVID-19 locally overshadowed hopes for fresh economic stimulus, and global stocks missed a two-month high.
Widespread outbreaks, lockdowns
31,444 new local COVID-19 infections on Wednesday broke a record set on April 13, when the commercial hub of Shanghai was crippled by a city-wide lockdown of its 25 million residents that will last for two months. .
This time, however, the major outbreaks are numerous and far-flung, with the largest in the southern city of Guangzhou and southwestern Chongqing, although cities such as Chengdu, Jinan, Lanzhou and Xi’an are reporting hundreds of new infections daily.
Nomura estimates that a fifth of China’s GDP is in lockdown, a larger share than the British economy.
Its analysts wrote, “Shanghai-style full lockdowns can be avoided, but replaced more often by partial lockdowns as a growing number of cities experience spikes in the number of COVID cases.” can.”
Although the number of official cases is low by global standards, China strives to eradicate every infection from China, a difficult challenge as China faces the first highly contagious Omicron strain of the winter.
China has recently begun to loosen some rules on mass testing and quarantine, as it appears to avoid all measures such as city-wide lockdowns.
Instead, cities are using more localized and often unannounced lockdowns. Many people in Beijing said they had recently received notices of a three-day lockdown of their housing compounds.
The far northeastern city of Harbin announced a lockdown of some areas on Thursday.
Many cities have returned to mass testing, which China had hoped would ease as spending increases. Others, including Beijing, Shanghai and the resort city of Sanya on Hainan Island, have restricted the movement of recent arrivals.
The central city of Zhengzhou, where workers at the giant Foxconn ( 2317.TW ) factory that makes iPhones for Apple Inc ( AAPL.O ) protested, announced five days of mass testing in eight districts, with daily tests. Became the latest to restore. Millions of inhabitants.
The expected slowdown in China, which is hurting domestic demand in particular, will reverberate in countries including Japan, South Korea and Australia, which export hundreds of billions of dollars worth of products and commodities to the world’s second-largest economy. are
