China’s COVID infections hit record as economic outlook darkens

  • China’s cases hit a record high in the Shanghai outbreak in April
  • Cabinet Notes on Reduction of Reserve Ratio Requirement (RRR)
  • Nomura cuts China GDP targets as lockdowns spread
  • China shares fall, global stocks lag gains

BEIJING, Nov 24 (Reuters) – China reported more COVID-19 infections on Thursday as cities across the country imposed localized 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 outbreak emerged in the central city of Wuhan, is casting doubt on investor hopes that China will soon ease its strict zero-covid policy, despite recent targeted measures.

The restrictions have affected the number of locked-out residents and the production of factories, including the world’s largest iPhone plant, which has been rocked by clashes between workers and security personnel in a rare disagreement.

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

“Even if you have money to stay at home every day, that’s not real life.”

The streets of Chaeong, the capital’s most populous district, have been increasingly empty this week.

Sanlitun, an upscale shopping area, was almost quiet on Thursday but for the buzz of e-bikes from delivery riders carrying meals to home workers.

Brokerage Nomura cut its forecast for China’s gross domestic product for the fourth quarter to 2.4% from 2.8%, and its full-year growth forecast to 2.8% from 2.9%, well below China’s official target of around 5.5%. % this year.

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“We believe reopening will be a long process with even higher costs,” Nomura wrote, cutting its China GDP growth forecast for next year to 4.0% from 4.3%.

China’s leadership has stuck by President Xi Jinping’s signature zero-covid policy, saying it is necessary to save lives and prevent the medical system from becoming overwhelmed, even as much of the world tries to cope with the virus.

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

Chinese shares fell on Thursday as worries about domestic daily COVID-19 cases overshadowed hopes of fresh economic stimulus, and global shares missed a two-month high.

Widespread outbreaks, lockdowns

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

At the moment, however, major outbreaks are few and far between, 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.

Nomura estimates that a fifth of China’s GDP is under lockdown, a bigger share than the British economy.

“Shanghai-style total lockdowns may be avoided, but they could be replaced by frequent partial lockdowns in growing cities due to rising Covid case numbers,” its analysts wrote.

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Although official case numbers are low by global standards, China faces its first winter of battling the highly contagious Omicron variant as it tries to stamp out every chain of infection.

China recently began easing some regulations on mass testing and quarantine as it avoids all measures such as city-wide lockdowns.

Instead, cities use more localized and often unannounced lockdowns. Many people in Beijing said they recently received notices of a three-day lockdown of their residential complexes.

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

Many cities have turned to mass testing, which China hopes to reduce as costs rise. Others, including Beijing, Shanghai and the Hainan Island resort city of Sanya, have had lower movements of recent arrivals.

Zhengzhou, the central city, is home to a large number of Boxcon workers (2317.TW) A factory that makes iPhones for Apple Inc (AAPL.O) staged protests, announced five days of mass testing in eight districts, the latest to renew daily tests for millions of residents.

A sharper-than-expected slowdown in China, particularly affecting domestic demand, will reverberate in countries including Japan, South Korea and Australia, which export hundreds of billions of dollars worth of goods and materials to the world’s second-largest economy.

reporting by Beijing and Shanghai newsrooms; By Bernard Orr; Editing by Tony Munro, Clarence Fernandez and Raisa Kasolowski

Our Standards: Thomson Reuters Trust Principles.

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