At the end of December 2022, Lijiang Old Town is quiet. Despite the three-day New Year’s weekend, tourists are rare in this popular city in Yunnan, a mountainous province in southern China. Only young people, most of them under 25, venture into the quiet streets of this once crowded city. Many restaurants and shops are keeping their doors closed.
Also in China, hear the worrying outbreak of the Covid-19 epidemic
On the closed shutters of one of them there is a small poster: “Because we have a lot of sheep, we are closed this week. In Mandarin, “sheep” (yang) is pronounced “positive,” so much so that the term has become the affectionate name for people infected with Covid-19. As the country experiences its first massive wave since moving away from the zero-Covid policy on December 7, 2022, both supply and demand are being impacted by the level of contamination, forcing customers and employees to stay home.
Result: After suffering from zero Covid for the whole of 2022, the Chinese economy is now facing the virus itself. Which lead to new major glitches. Over the New Year’s weekend, only 52 million trips took place across the country, a very slight increase compared to 2021 (+0.44%) but a 58% decrease compared to 2019.
staff shortage
The main difference is that this time economists and investors are optimistic: the situation should not last. Many are expecting a recovery after the Chinese New Year holiday on Sunday 22nd January or at least until the end of the first quarter. After a catastrophic year in which growth should be limited to less than 3.2% according to the International Monetary Fund, more dynamic growth could return in 2023. On Thursday, January 5th, JP Morgan revised its forecast up to 4.4% from 4.3%.
The country ended 2022 in pain: the purchasing managers’ PMI index, which measures industrial activity, released on December 31 points to 47, the lowest since February 2020
The return of sunny days will not be possible until most Chinese are infected and the population has gained sufficient collective immunity. “Right now I don’t see any real difference from before the opening,” says Cheng Gequ, owner of a small hotel in Lijiang. “It’s even worse than before it opened,” lamented the clerk at a traditional Shanghai restaurant in late December, equipped with an N95 mask (the equivalent of FFP2). Her clientele, who are rather elderly, barricaded themselves at home for fear of infection.
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