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China Tightens Covid Curbs as Cases Soar

China is seeing its highest daily number of new Covid cases of the entire pandemic. Here: an epidemic control worker wears a protective suit to prevent the spread of Covid-19 in Beijing.

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Kevin Frayer/Getty Images

China’s response to its worst Covid surge is raising hurdles for local and foreign businesses, denting consumption, and driving citizens to vent frustrations in a country known for crushing dissent.

China today reported 35,183 new cases for Friday, the highest daily total of its entire pandemic, pushing officials to tighten virus-containment measures they loosened just weeks ago.

At least 49 cities—accounting for 20% of China’s economic output—are under some form of lockdown, consultancy
Nomura
said last week.

The increasing lockdowns come after China announced a slew of measures to dial back its infamous zero-Covid policy, saying it would shorten quarantine times for citizens and foreign arrivals, as well as reduce the need to show negative Covid tests to enter public places, among other measures.

Nearly all of the domestic-related easing measures have since been violated. Most visible of recent business disruptions were Covid-related riots at a Foxconn-run plant that is Apple’s largest supplier of iPhones. 

Apple
(APPL) said it had dispatched a team to the location, but “iPhone shortages are accelerating,” and were simply more visible because of Black Friday, Wedbush analyst Dan Ives wrote in a note. 
Apple
shares fell 1.96% Friday in New York.

Even food delivery, normally lucrative during lockdowns, seemed hamstrung in places. One viral video emerged Saturday of a man in a Beijing apartment building lowering a rope from his window and a delivery man tying a bag of food to the end of it.

In the western metropolis of Chengdu, graphic designer Penny Wu said she was not allowed to leave her compound. Although she is able to work from home, this restricts access to computer equipment at her studio, she said.

“We’re waiting for the full apartment-door lockdown, like in September,” she told Barron’s, when she had to wait until nightfall to sneak her dog outside to quickly relieve himself.

As in other cities including Beijing, official
WeChat
accounts of Chengdu bars and entertainment venues were full of postings announcing event cancellations, as the lockdown there has closed stores and restaurants.

Four auto shows in China—the world’s largest car market—have been canceled or indefinitely postponed recently, in Shanghai, Beijing, Guangzhou, and Wuhan.

But citizens are fighting back. There have been mass street protests in multiple cities and viral videos springing up so fast that censors are struggling in their usual cat-and-mouse game of deleting them. 

Netizens remain incensed by a fire Thursday in a residential building in China’s western region of Xinjiang—which has been under a record-breaking 100 days of lockdown—after rescue efforts were stymied by Covid barriers. At least 10 people were killed, officials said.

China’s Covid curbs have decimated business activity, with most experts predicting the economy will grow between 2%-3% this year—assuming the current wave is brought under control.

Last week, at a major conference, a group of prominent economists called on the government to focus stimulus measures more on consumption instead of supply-side efforts, like infrastructure.

“There is now a consensus that boosting consumption would build the foundation of our economic recovery and that raising the share of consumption in GDP is at the center of the future strategy. Why has the government not yet launched a policy on the consumption side?” said Liu Yuanchun, vice president of the prestigious Renmin University, which hosted the 57th China Macroeconomic Forum.

Liu gave a closed-door presentation to China’s top officials, including leader Xi Jinping, in April, in which he expressed similar recommendations, according to the official Xinhua News Agency.

China on Friday said it was again cutting the amount of cash banks must hold in reserve, hoping to stimulate lending.

“The problem is the quality of demand, not the quantity of supply. This only helps if banks are being forced to lend more than they can manage to entities to whom otherwise they wouldn’t lend,” Peking University finance professor Michael Pettis told Barron’s.

Credit: marketwatch.com

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