China’s covid lockdowns are reducing the impact on its economy | Bot To News

Pictured here are locals on a subway in Zhengzhou city, Henan province, on Dec. 5, 2022, after the municipality announced that negative nucleic acid test results are no longer required to ride public transportation.

Vcg | Visual China Group | Getty Images

BEIJING – For the first time since the start of October, China’s covid-induced prisons have had a smaller impact on the economy, according to Nomura.

However, Bank of Japan analysts warned that the road ahead will be challenging as China appears unprepared for a spike in infections.

As of Monday, the negative impact of China’s Covid control on its economy fell to 19.3% of total Chinese GDP — down from 25.1% a week ago, Nomura’s chief China economist Ting Lu and team said in a report.

According to the Nomura model, last week’s figure was 25.1% higher than that seen during Shanghai’s two-month shutdown in the spring. In early October, the figure was much lower, close to 4%.

In the past few days, local authorities have relaxed some virus testing requirements, allowing people in cities such as Beijing and Zhengzhou to use public transport without having to show proof of a negative test result.

China does not appear to be well prepared for the massive wave of Covid infections and may have to pay for its procrastination by adopting a ‘live with Covid’ approach.

If they test positive for Covid-19, at least Beijingers are increasingly quarantined at home rather than in a centralized facility.

As of Tuesday morning, the city of Beijing announced that proof of a negative covid test within two or three days is no longer required to enter public areas such as shopping malls. But the level of initial implementation varied.

China has shown signs that there could be a gradual easing of its tight control over Covid. The country shortened the quarantine period in mid-November. Last week, the Deputy Prime Minister downplayed the seriousness of the Omicron variant.

China is moving toward a cautious reopening

However, the country has also reported a surge in virus infections, reaching daily records over the past few weeks. The number of cases has fallen in recent days due to a decline in mandatory virus testing.

“The end of zero covid is encouraging and should be quite positive for the markets, but we caution that the road to reopening may be gradual, painful and bumpy,” Nomura analysts said.

“Despite the significant resources devoted to severe ZCS over the past two years, China appears to be ill-prepared for the massive wave of Covid infections and may have to pay for its procrastination in adopting a ‘living with Covid’ approach.”

Read more about China from CNBC Pro

Covid control varies widely across cities and counties in China. Several restaurants in Guangzhou are able to continue with dine-in, while most in Beijing offer take-out only.

Schools in both cities remain mostly online.

Current lockdown measures affect about 452.5 million people, down from a much higher 528.6 million a week earlier, Nomura analysts said.

While these numbers exceed the population of many countries, they only reflect about a third of China’s population.

Why China shows no sign of moving away from its 'zero Covid' strategy

— This story has been updated to reflect that Beijing no longer needs it proof of a negative Covid test within two or three days to enter some public places.

Source link