China’s virus fight prompts fears of global economic-diplomatic influence

The Chinese government announced, on Tuesday, that more than 253,000 cases of coronavirus had been detected in China in the past three weeks, and that the daily average was rising, adding pressure on officials trying to minimize economic damage by easing controls that confine millions of people. in their homes. .

The ruling Communist Party earlier this month promised to reduce disruptions from its “zero COVID” strategy by making controls more flexible. But the latest wave of outbreaks is challenging, prompting major cities including Beijing to lock down densely populated areas, close shops and offices and order factories to isolate their workforces from outside contact.

That raised concerns that the decline in Chinese trade activity could hurt already weak global trade.

The official Chinese news service, citing the National Bureau of Disease Prevention and Control, said last week’s average daily infection cases of 22,200 was double the rate of the previous week.

“Some provinces are facing the most serious and complex situation in the past three years,” said the office’s spokesperson, Hu Xiang, at a press conference.

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Infection numbers in China are lower than those in the United States and other major countries. But the ruling party is sticking to “zero COVID,” which calls for every case to be isolated, while other governments ease travel and other controls and try to live with the virus.

On Tuesday, the government reported 28,127 cases found in the past 24 hours, including 25,902 asymptomatic cases. Roughly a third, or 9,022, were in Guangdong Province, the export-oriented manufacturing heartland adjacent to Hong Kong.

Global stock markets fell on Monday as concern about China’s controls added concern about a Federal Reserve official’s comment last week that already high US interest rates may have to rise more than expected to calm soaring inflation. Stocks were mixed on Tuesday.

Fouad Razakzadeh of StoneX said in a report that investors are “concerned about lower demand as a result of a less dynamic Chinese economy amid fears that there will be more COVID-related lockdowns.”

China is the world’s largest trader and largest market for its Asian neighbors. Weak consumer or manufacturer demand could hurt global producers of oil and other raw materials, computer chips and other industrial components, food and consumer goods. Restrictions that impede activity in Chinese ports could disrupt global trade.

Hu, the government spokesman, said officials were traveling around China and holding video meetings to ensure compliance with a list of 20 changes in anti-virus controls announced on November 11. These changes include shortening the quarantine of people arriving in China to five days from seven days. and narrowing the definition of who is considered a close contact of an infected person.

Despite this, on Monday, Guangzhou, the capital of Guangdong Province, suspended access to the Baiyun District, which has a population of 3.7 million. Residents of some areas of Shijiazhuang, a city of 11 million southwest of Beijing, have been told to stay at home while mass testing takes place.

Economic growth rebounded to 3.9 percent from a year earlier in the three months ending in September, up from 2.2 percent in the first half. But activity has already begun to wane.

Retail spending contracted 0.5 percent year-on-year in October, slowing from the previous month’s growth of 2.5 percent as cities reimposed anti-virus controls. Imports fell 0.3 percent, indicating weak consumer demand, which is the opposite of September’s 6.7 percent decline.

Chinese exports contracted 0.7 percent in October after US and European consumer demand slumped due to unusually large interest rate increases by the Federal Reserve and other central banks to cool inflation, which hit multi-decade highs.

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Businessmen and economists see the changes in anti-virus controls as a step toward lifting the controls that isolate China from the rest of the world. But they say “zero COVID” may remain in place until late in the second half of next year.

Last week, Guangzhou announced plans to build quarantine facilities for about 250,000 people. It added that 95,300 people from another Haizhou region have been hospitalized or quarantined.

Factories in Shijiazhuang were required to operate under “closed-loop management,” a term for employees who live in their workplaces. This adds up to the costs of food and living space.

Entrepreneurs are pessimistic about the current quarter, according to a survey conducted by Peking University researchers and financial firm, Ant Group Ltd. He said that the “trust index” based on responses from 20,180 business owners fell to its lowest level since early 2021.

Economists and health experts say the ruling party needs to vaccinate millions of elderly people before it can lift restrictions that prevent most foreign visitors.

“We don’t think the country is yet ready to open up,” Louis Lu of Oxford Economics said in a report. “We expect Chinese authorities to continue to fine-tune COVID controls over the coming months, and move toward a broader and more comprehensive reopening later on.”

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