China’s Covid lockdowns are having a lessening impact on its economy

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Pictured here are local residents on a subway in Zhengzhou city, Henan province, on Dec. 5, 2022, after the municipality said negative nucleic acid test results are no longer necessary to travel on public transport.

Vcg | Visual China Group | Getty Images

BEIJING — According to Nomura, China’s Covid lockdowns are having a diminishing impact on the economy for the first time since early October.

However, analysts at the Bank of Japan warned that the road ahead will be challenging as China does not appear to be ready for a spike in infections.

As of Monday, the negative impact of China’s Covid controls on the economy has fallen to 19.3% of China’s total GDP — down from 25.1% a week ago, Nomura’s Chief China Economist Ting Lu and a team said in a report .

According to Nomura’s model, last week’s figure of 25.1% was higher than during Shanghai’s two-month lockdown in the spring. At the beginning of October, the figure was much lower, almost 4%.

In recent days, local governments have eased some requirements for virus testing, allowing people in cities such as Beijing and Zhengzhou to take public transportation without having to show proof of a negative test result.

China appears ill-prepared for a massive wave of Covid infections, and it may have to pay for its procrastination in embracing a ‘living with Covid’ approach.

If they test positive for Covid-19, at least Beijing residents will increasingly be quarantined at home rather than having to do so in a centralized facility.

On Tuesday morning, the city of Beijing said evidence of a negative Covid test was no longer needed within two or three days to enter public spaces such as shopping malls. But the level of initial implementation varied.

China has shown signs that a gradual relaxation of strict Covid controls is imminent. The country shortened quarantine times in mid-November. Last week, a deputy prime minister downplayed the seriousness of the Omicron variant.

However, the country also reported a surge in virus infections, reaching daily record highs in recent weeks. The number of cases has declined in recent days, amid a decline in mandatory virus testing.

“Ending zero Covid is encouraging and should be quite positive for markets, but we warn that the road to reopening could be gradual, painful and bumpy,” said Nomura analysts.

“Despite the significant resources devoted to the heavy-handed ZCS over the past two years, China appears ill-prepared for a massive wave of Covid infections and may have to pay for its delay in embracing a ‘life with Covid-19’. approach.”

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Covid controls vary widely by city and district in China. More restaurants in Guangzhou city are allowed to dine in again, while most in Beijing only offer takeout.

Schools in both cities will largely remain online.

Some 452.5 million people are affected by the current lockdown measures, albeit a decrease from a much higher 528.6 million a week earlier, the Nomura analysts said.

While those numbers exceed many countries’ populations, they only reflect about a third of China’s.

Why China Shows No Signs Of Pulling Out Of Its 'Zero-Covid' Strategy

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

The Valley Voice
The Valley Voicehttp://thevalleyvoice.org
Christopher Brito is a social media producer and trending writer for The Valley Voice, with a focus on sports and stories related to race and culture.

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