China’s COVID infections hit record as economic outlook darkens

China’s COVID infections hit record as economic outlook darkens

China’s COVID infections hit record as economic outlook darkens

BEIJING, Nov 24 (Reuters) – China reported a record high of COVID-19 infections on Thursday, with cities across the country imposing localized lockdowns, mass testing and other curbs that are fueling frustration and darkening the outlook for the world’s second-largest economy.

The resurgence of infections, nearly three years after the pandemic emerged in the central city of Wuhan, is casting doubt on investors’ hopes that China will soon ease its rigid zero-Covid policy, despite recent more targeted measures.

The curbs are taking a toll on trapped 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 dissent.

“How many people have the savings to support them if things keep stopping?” asked a 40-year-old Beijing man named Wang who is a manager in a foreign company.

“And even if you have money to be at home every day, it’s not true living.”

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

Sanlitun, an upscale shopping area, was almost quiet on Thursday but for the whirring of the e-bikes of delivery riders carrying meals to those who work from home.

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

“We believe reopening is still likely to be a protracted process with high costs,” Nomura wrote, also lowering its forecast for China’s GDP growth 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 tries to coexist with the virus, saying it is necessary to save lives and prevent the medical system from being overwhelmed.

Acknowledging the pressure on the economy, the government said China would use timely cuts in banks’ cash reserves and other monetary policy tools to ensure sufficient liquidity, state media said on Wednesday, a hint that a cut in the reserve requirement ratio (RRR) could be coming soon.

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Wednesday’s 31,444 new local COVID-19 infections 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 was set to last for two months.

This time, however, major outbreaks are far from over, with the largest in the southern city of Guangzhou and southwestern Chongqing, although hundreds of new infections are reported daily in cities such as Chengdu, Jinan, Lanzhou and Xian.

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

It recently began to loosen some norms on mass testing and quarantine, as it looks to avoid all-out measures such as city-wide lockdowns such as in Shanghai this year.

Recently, cities have used more localized and often unannounced shutdowns. Many people in Beijing said they had recently received notices of a three-day shutdown of their residential complexes.

The 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 restricted movements of recent arrivals.

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

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

The central city of Zhengzhou, where workers at the massive Foxconn ( 2317.TW ) factory that makes iPhones for Apple Inc ( AAPL.O ) staged protests, announced five days of mass testing in eight districts, becoming the latest city to revive daily tests for millions of inhabitants.

Reporting from Beijing and Shanghai newsrooms; Writing by Bernard Orr; Editing by Tony Munroe and Clarence Fernandez

Our standards: Thomson Reuters Trust Principles.

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