China’s sudden ‘reopening’ reveals new economic challenges


People line up outside a fever clinic in Beijing on December 14, 2022, just days after the country eased its Covid controls in freezing weather in the capital.

Yuxuan Zhang | Afp | Getty Images

BEIJING – The rapid rollback of many Covid-related restrictions in mainland China was unexpectedly sudden, revealing a new set of economic challenges.

Over the past two weeks, local and central governments have relaxed several measures that have forced many people to stay at home and businesses to operate largely remotely. Notably, the central government said last week that negative virus tests and health code checks were no longer necessary to travel domestically.

Meanwhile, reports of local residents being sick have skyrocketed. The city of Beijing said fever clinics received 22,000 visits on Sunday – 16 times more than a week ago.

“This reopening has come quite suddenly and rather decisively. It has exceeded our expectations,” said Gang Yu, co-founder and executive chairman of 111, an online drug and healthcare retailer. That’s according to a CNBC translation of his comments in Mandarin.

Shortage of personnel and medicines

Since late November, orders for fever-reducing products and related drugs have increased tenfold, Yu said in a telephone interview on Thursday. He said there is an “extreme shortage” of drugs that the factories cannot keep up with, a situation he said will continue for at least another three or four weeks.

On top of the high demand, dozens of workers in 111’s warehouses or offices in various parts of China have tested positive for Covid, creating an “extraordinary shortage” of staff, Yu said.

That’s a different challenge from earlier this year, when widespread Covid lockdowns meant thousands of new orders stranded at various distribution points every day, Yu said.

Delivery is still slower than usual in parts of the country.

As late as Sunday, China’s postal agency said more than 400 distribution points in Beijing and other parts of the country remained closed for Covid-related reasons.

For a sense of scale, the postal service said Tuesday it picked up more than 360 million packages a day — that’s more than one package per person in the US.

We think the inbound migration around the Chinese New Year holiday in late January could lead to an unprecedented spread of Covid and serious disruptions to the economy. announced on Wednesday that more than 1,000 couriers from other parts of the country had arrived in the capital Beijing. Anecdotally, in recent days in Beijing, app-based food and grocery services that typically deliver within an hour only did so at much longer intervals, or the next day.

Rising infections may offset easing

“In the past two weeks, the Chinese government has made a sudden 180-degree turn by ending its zero-Covid policy, completely scrapping most domestic prevention measures,” Nomura’s Chief China Economist Ting Lu and a team said in a statement Thursday. report.

“Emerging Covid infections may offset the short-term positive impact of easing.”

“The rapid wave of infections in major cities may be just the beginning of a massive wave of Covid infections,” the analysts said.

“We expect key activity indices to remain weak or even fall further in December. We believe the inbound migration around the Chinese New Year holiday in late January could lead to an unprecedented spread of Covid and serious disruptions to the economy.”

China on Thursday reported a worse-than-expected fall in retail sales in November, as well as slower growth in industrial production and fixed asset investment.

Get through the winter first

Social activity remains subdued amid the wave of infections and freezing weather in northern cities. Traffic data from Baidu indicates that most people in major cities such as Beijing and Guangzhou have not ventured, with congestion levels still very low on Thursday.

Management at Chinese travel booking site was also reserved about how quickly domestic travel would rebound.

Learn more about China from CNBC Pro

“We saw a very strong sequential increase in domestic flights and hotel reservations over the past two weeks,” they said Thursday, according to a FactSet earnings call.

“But in the very near term, we are still cautious as winter is usually a flat season for both business and leisure travel,” they said.

“And it may also take some time for people to get through the first wave of infections before travel demand fully releases and recovers. But we expect a very nice uptick and growth in the domestic travel segment next year.”

The Valley Voice
The Valley Voice
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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