BEIJING – Increasing Covid infections across China make it difficult for the government to achieve zero-Covid without returning to a severe lockdown, Macquarie’s Chief Economist Larry Hu said.
In the past few days, the number of daily cases has risen to around or above 28,000 – close to the levels seen in April during the difficult lockdown in Shanghai, according to a CNBC analysis of Wind Information data. The figures marked the last time China saw fewer daily infections in June, just after Shanghai eased its restrictions.
The latest wave of Covid-19 has hit the southern city of Guangzhou, the capital Beijing and much of central China – prompting local authorities to tighten restrictions on businesses and public events this month.
“China may have already passed the point of no return, because it is impossible to achieve zero Covid without another shutdown of Shanghai,” Hu said in a report on Tuesday. for example, reduce the curve, by strengthening the Covid controls in the meantime.”
Hu said this month there would be a slight change in official documents and propaganda as the billboard authorities plan to reopen in the next six to nine months. But he added that “the reopening process should involve back and forth.”
Markets have been speculating for weeks about China’s departure from its strict zero-Covid policies. The regulation has led to the economy, which did not stop growth when Shanghai closed and posted growth of only 3% in the first three quarters of the year.
In terms of GDP, about 20% of China’s economy was affected by the Covid control as of Monday, about 21.2% recorded in mid-April when Shanghai was closed, Nomura’s Chief China Economist Ting Lu said, citing the company’s example.
“Beijing has recently shown that it wants to reopen, and has put in place some transitional measures, but the reopening may be time-consuming and uncomfortable,” Lu said in a report this week.
He said Vietnam’s lifting of its Covid restrictions from last year could light the way for China. He also noted how the Southeast Asian nation did not see a “post-pivot disease spike,” while its GDP also rose.
The Covid regime is firmly entrenched in Beijing
Chinese authorities are faced with the difficult task of trying to keep the Covid measures focused, and control the disease.
As of Monday, about 412 million people were affected by the lockdown measures in China, according to Nomura estimates. This is up from 340 million last week, the report said.
Nomura analysts noted that many closings or adjustments are made without public announcements. “We believe [the southwestern municipality of] “Chongqing is currently experiencing the worst congestion in China, based on many metrics,” the report said.
Beijing’s Covid control has only been tightened since Tuesday.
Officials announced more frequent virus testing requirements, and ordered many restaurants to stop serving food in stores. Many shopping centers are closed, as are large parks. Various buildings have been closed.
State media said on Tuesday that the city-focused Zhongguancun conference, which was due to start this week, will be postponed until next year. The meeting had already been delayed since September.