China Battles New Covid Outbreak in Pivotal Industrial East

 

China is battling a new wave of Covid infections on its industrial east coast, a region that’s crucial to its economic output and global supply chains.

About 115 million people are affected by the lockdown measures, up sharply from about 68 million last week, in regions that account for around 17.1 trillion yuan ($2.6 trillion) of GDP, estimates Nomura Holdings. Eleven cities that account for almost 15% of GDP are affected by the lockdowns, compared with five cities and 10.1% of GDP a week earlier, it said.

“The risk of returning to a downswing of the Covid Business Cycle should not be underestimated,” said chief China economist Lu Ting  in Hong Kong in a note on Monday. “Markets could become a bit too complacent if they ignore the rebound of Covid cases and underestimate the costs of persistent Covid containment measures,” he said.

Lingbi town in Anhui province locked down its nearly 1 million residents and said it had cancelled an event for local businesses to meet government officials. Si county, also in Anhui, locked down its 760,000 residents and suspended public traffic as it reported 288 cases on Saturday. Anhui accounted for most of China’s new infections, reporting 61 symptomatic and 231 asymptomatic cases for Saturday.

Wuxi, a manufacturing hub in the Yangtze Delta on the central part of the east coast, halted operations at many public venues located underground, including shops and supermarkets. Dine-in services in restaurants were suspended, and the government advised people to work from home. City authorities also urged residents not to leave Wuxi unless necessary, after reporting 42 new asymptomatic cases on Saturday.

Yiwu, China’s export capital for small commodities, cancelled flights to the capital, Beijing, for an unspecified period, state TV said, citing COVID prevention measures. Yiwu has reported three COVID cases in the past week.

 

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Lockdowns And Testing Are Back

Beijing continues to demand that authorities detect and contain infections in its “dynamic zero-Covid” strategy, though it has warned against widening curbs unnecessarily as it struggles to revive the economy.

Daily numbers of locally transmitted infections in mainland China increased to more than 300 over the weekend compared with a few dozens in late June. While tiny by global standards, local officials have closed some businesses and are locking down millions.

In the eastern province of Anhui, which reported most of China’s local cases in the latest flare-up, officials in its provincial capital Hefei said late on Sunday they are doing citywide testing every three days, after briefly scrapping weekly test requirements last month.

In the southeastern province of Fujian, the Jiaocheng district and the town of Xiapu in the city of Ningde ran mass testing on Sunday.

Ningde, where the world’s largest battery maker CATL is headquartered, reported 10 domestically transmitted Covid infections for Sunday, data from Fujian health authority showed on Monday.

Mainland China reported a total of 380 new local infections for July 3, of which 41 were symptomatic and 339 were asymptomatic, the National Health Commission said on Monday.

The infections were detected in the provinces of Anhui, Jiangsu, Liaoning, Fujian, Shandong, Shaanxi, Zhejiang, Guangdong and Sichuan, as well as in the city of Shanghai.

 

Macau Largely Closed, But Casinos Open

Meanwhile, Macau also kicked off a new round of Covid testing for its more than 600,000 residents on Monday, as officials in the world’s biggest gambling hub raced to limit spiralling infections in the city’s worst outbreak since the pandemic began.

All residents face three rounds of tests this week, in addition to rapid antigen tests, as Monday’s 68 new infections took the tally in the former Portuguese colony to 852 since the middle of June. About 12,000 people are in quarantine.

Although the Chinese special administrative region has not ordered a full-scale lockdown of the kind imposed in mainland cities such as the business hub of Shanghai, Macau is already largely closed.

Non-essential government services are shut, with schools, parks, sports and entertainment facilities closed, while restaurants may only provide takeaway items.

However, Macau has allowed casinos to stay open to ensure job security in an industry that generates more than 80% of government income by employing most of the city’s population, whether directly or indirectly.

Still, punters are scarce and the casinos have very few staff, with many employees staying home in line with a government directive.

Analysts said the six operators – Sands China, Wynn Macau, MGM China, Melco Resorts, Galaxy Entertainment and SJM Holding – are likely to have no income for several weeks beause of the measures.

Macau had been largely free of Covid since an outbreak in October 2021. Its infections are still far below those elsewhere, including the neighbouring global financial hub of Hong Kong, which has seen daily cases jump to more than 2,000 this month.

However, the services of its sole public hospital are severely stretched. The territory has an open border with mainland China, with many residents living and working in the adjoining city of Zhuhai.

About 600 Chinese health workers have come to Macau to assist coronavirus efforts. Officials have set up a makeshift hospital next to the city’s Las Vegas-style Cotai strip to help cope.

 

• Jim Pollard with Reuters.

This report was updated with further details and the headline amended on July 4, 2022.

 

 

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