China’s COVID infections hit record high as economic outlook worsens

BEIJING, Nov 24 (Reuters) – China reported a record high of COVID-19 cases on Thursday as cities across the country imposed local lockdowns, mass testing and other restrictions that fueled frustration and darkened the outlook for the world’s second-largest economy .

The resurgence of infections, nearly three years after the pandemic emerged in the central city of Wuhan, is casting doubt on investors’ hopes that China will soon ease its strict zero-spread policy for COVID, despite recent more targeted measures.

The restrictions are affecting locked-out residents as well as production at factories, including the world’s largest iPhone plant, which has been rocked by clashes between workers and security officials in a rare show of dissent.

“How many people have the savings to support them if things keep coming to a standstill?” asked a 40-year-old Beijing man surnamed Wang, who is a manager at a foreign company.

“And even if you had the money to stay at home every day, that’s not a real lifestyle.”

The streets of Chaoyang, the capital’s most densely populated district, are increasingly empty this week.

Sanlitun, an upscale shopping area, was almost silent on Thursday except for the whirring of the electric bicycles of deliverymen carrying food to home workers.

Brokerage Nomura cut its fourth-quarter China GDP forecast to 2.4% year-on-year from 2.8% and cut its full-year growth forecast to 2.8% from 2.9%, far from China’s official target of around 5.5% this year.

“We believe reopening is still likely to be a protracted, high-cost process,” Nomura wrote, also cutting its forecast for China’s GDP growth next year to 4.0 percent from 4.3 percent.

China’s leadership is sticking to zero-COVID, a signature policy of President Xi Jinping, even as much of the world is trying to co-exist with the virus, saying it is necessary to save lives and prevent the medical system from being overwhelmed.

Acknowledging the pressure on the economy, the cabinet said China would use timely cuts in bank cash reserves and other monetary policy tools to ensure sufficient liquidity, state media reported on Wednesday, hinting that the reserve requirement ratio (RRR) may come soon.

WIDE SPREAD OF EPIDEMICS

Wednesday’s new 31,444 local COVID-19 infections broke the record set on April 13, when the commercial hub of Shanghai was crippled by a citywide lockdown of 25 million residents that will last for two months.

This time, however, large outbreaks are widespread, with the largest in the southern city of Guangzhou and southwestern Chongqing, although hundreds of new infections are reported daily in cities such as Chengdu, Jinan, Lanzhou and Xi’an.

Although the official number of cases is low by global standards, China is trying to eradicate any chain of infections.

It has recently begun to loosen some norms on mass testing and quarantine as it seeks to avoid sweeping measures like a city-wide lockdown like the one in Shanghai this year.

Recently, cities have been using more localized and often unannounced lockdowns. Many people in Beijing said they recently received notices of a three-day lockdown of their apartment complexes.

The far northeastern city of Harbin announced a lockdown in some areas on Thursday.

Many cities have returned to mass testing, which China had hoped to scale back as costs rise. Others, including Beijing, Shanghai and Sanya on the resort island of Hainan, have restricted movement of recent arrivals.

Nomura estimates that more than a fifth of China’s GDP is under lockdown, a share larger than Britain’s economy.

“Shanghai-style total lockdowns may be avoided, but they may be replaced by more frequent partial lockdowns in an increasing number of cities due to the rising number of COVID cases,” the analysts wrote.

The central city of Zhengzhou, where workers at the huge Foxconn ( 2317.TW ) factory that makes iPhones for Apple Inc ( AAPL.O ) staged protests, announced five days of mass testing in eight districts, becoming the latest city to resume daily tests for millions of inhabitants.

Reports from Beijing and Shanghai newsrooms; Written by Bernard Orr; Editing by Tony Munro and Clarence Fernandez

Our standards: The Thomson Reuters Trust Principles.

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