China doubles down on zero-Covid
Beijing rapidly expanded its mass Covid-19 testing from one district to most of the city’s 22 million residents on Monday, adding to expectations of an imminent lockdown similar to Shanghai’s and prompting panic buying. Shanghai, which reported 51 Covid deaths on the same day, has “forced most of its 25 million citizens” to stay indoors for weeks despite reports of people running out of food and the sick and elderly being unable to access non-Covid-related medical care, says Nicola Smith in The Daily Telegraph. Beijing reported just 33 new cases on Monday, but officials insist the approach is necessary to avoid the many deaths seen in other countries prior to vaccination campaigns.
The policy is having a heavy impact on the economy as well as morale. The news triggered a “global sell-off” and currencies “slipped” against the dollar, says Patrick Hosking in The Times. Chinese stocks suffered their worst day since March 2020 and European shares fell to their lowest levels in a month. Market sentiment was already “sombre” after hints of interestrate rises in the US and the UK.
Chinese lockdowns slow general economic growth and create supply-chain issues that will make inflation worse, notes Christopher Grisanti, chief equity strategist at MAI Capital Management in New York.
China’s insistence on its zeroCovid policy has also spurred comparisons to the “chaotic social upheaval” of the Cultural Revolution and fuelled interest in emigration among Chinese, says Cissy Zhou in Nikkei Asia.
By Wednesday, the picture was at least looking a little rosier, says Bloomberg. Cases in Shanghai fell for a fourth consecutive day to 13,562, with authorities hinting at an easing of lockdowns, and the number of new cases in Beijing remains below 50. Roughly 19.8 million swabs have been taken this week, with officials pleading for more residents to come forward to help “squash” Omicron before it “spirals out of control”.