The National Health Commission reported 31,444 new local cases on Wednesday, the highest number of new infections in one day since the start of the pandemic. Economic forecasts are lowered again.
China recorded a record number of Covid-19 infections on Thursday. Cities across the country have imposed local lockdowns and other restrictions that further cloud the outlook for the world’s second-largest economy.
The rise in infections, the highest since an outbreak in Shanghai earlier this year, is weighing on investors’ hopes that China will soon loosen a strict Covid-zero policy that, along with a housing market downturn, , has overwhelmed the economy.
The lockdown and measures are also fueling frustration among Chinese people, who have halted production at factories, including the world’s biggest iPhone factory, which has been rocked by violent clashes between workers and security guards in a rare demonstration.
“We believe that reopening will still be a time-consuming and costly process,” Nomura analysts wrote in a statement. The brokerage lowered its fourth-quarter GDP forecast to 2.4% from a year earlier, from 2.8%, and also lowered its full-year forecast to 2.8% from 2.9%.
Regime insists on zero Covid policy
The Chinese leadership is sticking to its Covid-zero policy, which includes some of the world’s strictest measures to contain the virus, claiming it is necessary to save lives and prevent the medical system from being overwhelmed.
However, acknowledging the pressure on the economy, the cabinet said China will reduce banks’ cash reserves and use other monetary policy tools in a timely manner to ensure sufficient liquidity, state media reported on Wednesday, hinting at a cut in the compulsory rate. (RRR) closes.
China reported 31,444 new local Covid cases on Wednesday, breaking the record set on April 13 when Shanghai was fully locked down for two months.
Chinese stocks fell on Thursday as concerns over the record number of cases overshadowed optimism about new economic stimulus.
Low numbers in the global comparison
While official infection numbers are low by global comparison, China is trying to stop any chain of infection, a policy only adopted by China under President Xi Jinping.
China has recently started to ease some measures related to mass testing and quarantine, trying to avoid general measures like lockdowns imposed on Shanghai’s 25 million residents.
Lately, cities have adopted more localized and often unannounced lockdowns. In Beijing, for example, dozens of residents reported receiving communications from their condominiums in recent days warning them of three-day lockdowns.
Analysts at Nomura estimate that the lockdowns have affected more than a fifth of China’s total gross domestic product – a number roughly larger than the size of the UK economy.
Growth forecast fell further
“Full lockdowns like in Shanghai can be avoided, but could be replaced by more frequent partial lockdowns in an increasing number of cities due to rising numbers of Covid cases,” Nomura analysts write. The bank also lowered its GDP growth forecast for next year from 4.3% to 4.0%.
The city of Zhengzhou, where workers at the giant Foxconn factory that makes iPhones for Apple Inc. were protesting, it announced five days of mass testing across eight counties, the latest in a string of cities to resume daily testing for millions of residents.
(Portal)