There were 26,087 new daily infections reported in China’s financial hub on Sunday, an all-time high. Residents have been locked away for weeks now, with frustration rising among the population as they struggle to access food and medical care.
In another development, the southern municipality of Guangzhou is implementing a series of restrictions after the local government warned 20 cases they discovered last week could be the tip of the iceberg. The city is a hub for commerce, and infections and similar containment measures across China are a growing drag on the world’s second-largest economy, with consequences for global growth, supply chains and inflation.
According to Tommy Xie, head of China research at Oversea-Chinese Banking Corp, other local governments could become more sensitive to outbreaks and increase mobility controls even if they do not. low cases. Xie wrote in a report Monday.
Economists now expect the economy to grow 5% this year, below the official target of about 5.5%. Analysts at Morgan Stanley have cut their growth forecasts for this year due to the impact of the account lockout, while Citigroup Inc. warns of risks to growth in the current quarter.
Chinese stocks tumbled on Monday on Covid concerns, rising global interest rates and ongoing regulatory obstacles. The Hang Seng Index fell 3% Monday in Hong Kong, as did China’s benchmark CSI 300 Index.
China’s slowdown has had a ripple effect in the region. Activity among Hong Kong’s private businesses has faltered again after contracting in March, as shutdowns in mainland China weighed on new orders, according to a managers’ index. purchasing manager S&P Global. Taiwan’s exports to China also decelerated in March compared with February.
Bruce Pang, head of macro and strategy research at China Renaissance Securities Hong Kong Ltd.
The Shanghai Maritime Exchange (Exports) Containerized Cargo Index, a measure of freight rates, fell to 4,349 on April 1 from a peak of 5,110 in early January. According to Pang, the drop shows that exports are easing.
Economists expect China’s exports to grow 13% in March with data forecast for this week. That would be an acceleration from 6.2% in February but slower than the 30% growth recorded for all of 2021. Exports are expected to slow later this year on a high base and due to Factories in other countries reopened.
Containers are piling up in Shanghai, China’s largest port, as the city’s closure has led to a shortage of trucks to clear imports. It also disrupted business in the city, with companies like chip giant Semiconductor Manufacturing International Corp. struggled last week to secure trucks to deliver finished goods.
Many individual housing complexes in the city were locked down earlier in March, and then the city banned movement in the eastern part – home to the financial district and many industrial zones – on March 28 and later. there in the west since April 1. Cases have skyrocketed despite those controls, but about 95 percent of virus infections are now among people who have been quarantined, data from the government says. city rights on Monday showed.
In a tentative sign of easing, Shanghai authorities said on Monday that people living in housing complexes who have not experienced infections in the past two weeks will be released from lockdown and allowed to move around. move around their neighborhood. City officials did not say how many people are covered by the policy, but it is the first indication that the road out of the weeks-long crisis is on the horizon.
Other cities around the country are also seeing an increase in cases, with 21 of China’s 31 provinces reporting cases on Sunday. The city of Wuhan, where the outbreak first emerged more than two years ago, reported 12 asymptomatic cases on Sunday and announced on Monday morning that everyone would have to have a negative Covid test result. to take the subway.
Guangzhou has closed schools until April 17 and will conduct mass inspections, and some districts have closed indoor entertainment venues. Local authorities are also requiring residents to have a negative nucleic acid test before leaving the city.
Cities in more than 10 provinces have closed some entrances and exits to highways to ramp up Covid testing of people entering their cities, local media Jiemian reported on Saturday. Many highway checkpoints are stopping drivers based on their travel history, forcing them to detour or turn around and disrupt logistics.
Logistics operations in the Yangtze River Delta around Shanghai have not been smooth, the Ministry of Transport said on Saturday in a statement. The ministry has ordered not to set up Covid testing stations on the main lanes of the highway to keep traffic flowing.
In a sign of growing dissatisfaction with these types of restrictions and lockdowns, European companies in China last week asked the government to relax Covid Zero policies, saying it was causing ” significant disruption” to logistics and manufacturing in supply chains across China.
Disruption to business is showing through a variety of indicators. Factory activity in China in March fell to its worst since the outbreak of the pandemic two years ago, according to the Caixin Manufacturing Purchasing Managers’ Index, a private survey focused on into smaller export-oriented firms. The official PMI also showed declines in both the manufacturing and services sectors in March.
The impact on consumption from the closures and many people staying at home instead of shopping or traveling continues to worsen. Monday’s data showed vehicle sales in March fell 10.9% from a year earlier, after rising 4.7% in February.
Tourism revenue during the Qingming holiday, a three-day holiday last week, fell 31 percent year-on-year to 18.8 billion yuan ($3 billion), according to official data. This is equivalent to 39% of pre-pandemic levels in 2019, the Ministry of Culture and Tourism said.
The lockdown has also pushed up vegetable prices, up 17.2% year-on-year in March, compared with a 0.1% drop in February. Additionally, there are growing concerns that the restrictions on movement are threatening spring planting in the Northeast, the nation’s most important source of rice, soybeans and corn.
This means that “the risk of food shortages could increase in the second half of the year, adding to the pressure of global food shortages exacerbated by the ongoing military conflict in Ukraine”, the experts said. economics of Nomura Holdings Inc. led by Lu Ting said in a note on Monday. “Rising food and energy price inflation may limit the space for the People’s Bank of China to cut interest rates despite the rapidly shrinking economy,” Mr. Nomura wrote.