November 29, 2022

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Coronavirus infections in China hit a record high, with the economic outlook darkening

Coronavirus infections in China hit a record high, with the economic outlook darkening

BEIJING (Reuters) – China reported a record high number of COVID-19 infections on Thursday, as cities nationwide imposed local lockdowns, mass testing and other restrictions feeding frustration and inflated expectations for the world’s second-largest economy.

The resurgence of infections, nearly three years after the outbreak of the epidemic in the central city of Wuhan, casts doubt on investors’ hopes that China will ease its strict anti-coronavirus policy soon, despite more targeted measures recently.

The restrictions affected closed residents as well as production at factories, including the world’s largest iPhone factory, which has been rocked by clashes between workers and security personnel in a rare show of opposition.

“How many people have the savings to support if things keep stalling?” asked a 40-year-old Beijing man surnamed Wang, a manager in a foreign company.

“And even if you have the money to stay home every day, that’s not real life.”

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

Sanlitun, an upscale shopping district, was virtually silent Thursday, however, due to the buzz of e-bikes of delivery riders delivering meals to those working from home.

Brokerage firm Nomura cut its forecast for China’s fourth-quarter GDP to 2.4% year-on-year from 2.8%, and lowered its full-year growth forecast to 2.8% from 2.9%, well below China’s official target of 5.5%. % this year.

“We believe that reopening is still likely to be a protracted process with high costs,” Nomura wrote, also lowering the forecast for Chinese GDP growth for next year to 4.0% from 4.3%.

China’s leadership has stuck to zero COVID, a signature policy of President Xi Jinping, even as much of the world is trying to come to terms with the virus, saying it is necessary to save lives and prevent the medical system from collapsing.

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Acknowledging the pressure on the economy, the cabinet said China will use timely cuts in banks’ cash reserves and other monetary policy tools to ensure adequate liquidity, state media reported Wednesday, hinting that a cut in the reserve requirement ratio may come soon. .

widespread spread

The 31,444 new domestic COVID-19 infections on Wednesday broke the record set on April 13, when the commercial hub of Shanghai was paralyzed by a citywide lockdown of its population of 25 million that will last two months.

But this time, the epidemics spread widely, with the largest in the southern city of Guangzhou and southwest Chongqing, although hundreds of new infections were reported daily in cities such as Chengdu, Jinan, Lanzhou and Xi’an.

While official case numbers are low by global standards, China is trying to stamp out every chain of infection.

It recently started relaxing some standards around mass testing and quarantines, as it looks to avoid sweeping measures such as a citywide lockdown like that in Shanghai this year.

Recently, cities are using more localized and often unannounced lockdowns. Several people in Beijing said they had recently received notices that their apartment complexes would be closed for three days.

The far northeastern city of Harbin declared some areas to be closed on Thursday.

Many cities have returned to mass testing, which China had hoped to scale back as costs rose. Other countries, including Beijing, Shanghai and Sanya on the resort island of Hainan, have limited movements for new arrivals.

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

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“Shanghai-style full lockdowns could be avoided, but may be replaced by more frequent partial lockdowns in a growing number of cities due to rising numbers of COVID cases,” its analysts wrote.

Downtown Zhengzhou, where the workers of the huge Foxconn Corporation (2317.TW) The factory that makes iPhones for Apple Inc (AAPL.O) Protests were staged, and five days of mass testing were announced in eight districts, becoming the latest city to mark daily testing for millions of residents.

Reporting by the Beijing and Shanghai newsrooms; By Bernard Orr; Editing by Tony Monroe and Clarence Fernandez

Our standards: Thomson Reuters Trust Principles.