TAIPEI — According to Larry Hu, chief China economist at Macquarie, rising Covid infections on the mainland of China make it more difficult for the authorities to attain zero-Covid without turning to a strict lockdown.
According to CNBC calculations based on Wind Information data, the daily case count has increased over the past few days to close to or beyond 28,000, numbers last seen in April amid a strict lockdown in Shanghai. The statistics showed that only a few illnesses each day were last seen in mainland China in June, shortly after Shanghai loosened its limits.
The latest Covid wave has affected numerous central Chinese cities, including Beijing, Guangzhou, and many others, leading local authorities to tighten regulations on business and social activity this month.
Hu noted in a study on Tuesday that China “may have already crossed the point of no return” since achieving zero Covid without a second hard lockdown a la Shanghai is unlikely. “Policymakers could now tighten the Covid regulations for the time being to reduce the virus transmission, i.e. flatten the curve.”
Hu cited minute adjustments in government propaganda and policy this month as evidence that officials are getting ready to reopen in the following six to nine months. But he said that “there will be a lot of back and forth on the way to reopening.”
Market speculators have been debating when China will abandon its strict zero-Covid policy for weeks. The controls have had an impact on the economy, which only managed to expand a meager 3% throughout the first three quarters of the year while Shanghai was under lockdown.
According to Nomura’s Chief China Economist Ting Lu, who cited the company’s model, as of Monday, Covid regulations had a negative impact on close to 20% of China’s GDP, which is close to the high of 21.2% recorded in the middle of April during Shanghai’s shutdown.
Lu added in a different report this week that Beijing has recently displayed early signs of desire to reopen and has implemented some fine-tuning procedures, but the reopening may be a drawn-out process with discomfort.
He claimed that Vietnam’s relaxation of its Covid restrictions since the fall of last year may help China determine its future course. He mentioned how the GDP of the countries in Southeast Asia recovered but there was “no immediate rise in infections after the shift.”
Beijing tightens covid regulations
China’s local government faces the challenging issue of attempting to increase the targeting of infection control measures.
According to Nomura estimates, lockdown procedures have impacted around 412 million individuals in mainland China as of Monday. The report indicated that’s an increase from 340 million the previous week.
The Nomura analysts pointed out that many lockdowns or controls are put in place covertly. The report stated that “based on our observation of several mobility metrics, we believe [the southwestern municipality of] Chongqing is currently undergoing the most severe local lockdown in China.”
Since Tuesday, COVID rules have only been reinforced in Beijing.
Authorities ordered more restaurants to halt in-store dining and issued criteria for more frequent virus testing. Large parks have also closed, along with more shopping centers. Several apartment complexes have been secured.
The city’s tech-focused Zhongguancun Forum, which was supposed to begin this week, has been postponed to next year, according to state media on Tuesday. From September, the meeting had already been postponed.
