China’s COVID infections hit record as economic outlook darkens

  • Shanghai outbreak hits record high in Chinese cases in April
  • Cabinet hints at cut to reserve requirement ratio (RRR)
  • Nomura cuts China GDP target as lockdown spreads
  • China stocks fall, global gains lag behind

BEIJING, Nov 24 (Reuters) – China reported a record number of COVID-19 infections on Thursday, with localized lockdowns, mass testing and other restrictions imposed in cities across the country adding to frustration, And darkened the outlook for the world’s second-largest economy.

Nearly three years after the pandemic emerged in the central city of Wuhan, the resurgence of infections has cast doubt on investors’ hopes of easing China’s strict zero-COVID policy soon, despite more targeted measures recently.

The restrictions have taken a toll on locked-down residents as well as output at factories, including the world’s largest iPhone factory, which has seen clashes over rare dissent between workers and security personnel.

“If things continue to stagnate, how many people have savings to support them?” asked a 40-year-old Beijing man surnamed Wang who works as a manager at a foreign company.

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

The streets of Chaoyang District, the capital’s most populous district, have become increasingly empty this week.

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The high-end shopping district of Sanlitun was nearly silent on Thursday, but the e-bikes of delivery men delivering meals to people working from home roared by.

Brokerage Nomura cut its forecast for China’s fourth-quarter GDP growth to 2.4 percent year-on-year from 2.8 percent, and lowered its full-year growth forecast to 2.8 percent from 2.9 percent, well below China’s official target of about 5.5 percent this year.

“In our view, reopening is likely to remain a lengthy and costly process,” Nomura wrote. He also cut his forecast for China’s GDP growth next year to 4.0% from 4.3%.

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

China’s cabinet acknowledged the pressure on the economy and said China would cut monetary policy tools such as bank cash reserves in due course to ensure ample liquidity, state media said on Wednesday, suggesting the reserve requirement ratio (RRR) could be cut soon.

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Chinese shares fell on Thursday as concerns over record daily domestic COVID-19 cases outweighed optimism over fresh economic stimulus and missed a rally in global stocks to two-month highs.

widespread outbreak, lockdown

Wednesday’s 31,444 new local COVID-19 infections shattered a record set on April 13, when Shanghai’s commercial hub was paralyzed by a two-month lockdown of the city’s 25 million residents.

This time, however, the large outbreaks were numerous and widespread, most severely in the southern cities of Guangzhou and southwest of Chongqing, although cities such as Chengdu, Jinan, Lanzhou and Xi’an reported hundreds of new infections every day.

Nomura estimates that more than a fifth of China’s GDP is in lockdown, a higher proportion than the UK economy.

“Shanghai-style total lockdowns are avoidable, but they may be replaced by more frequent partial lockdowns in an increasing number of cities due to surging COVID case numbers,” its analysts wrote.

While official case totals are low by global standards, China’s attempt to wipe out every infection chain presents a tougher challenge as it faces its first winter battling a highly contagious Omicron variant.

China has recently begun easing some norms around mass testing and quarantines as it looks to avoid blanket measures such as city-wide lockdowns.

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Instead, cities have been using more localized and often unannounced lockdowns. Many people in Beijing said they had recently received three-day lockdown notices about their residential complexes.

On Thursday, the far northeastern city of Harbin announced a partial lockdown.

Many cities have resumed mass testing, which China had hoped to reduce as costs rose. Elsewhere, including Beijing, Shanghai and the resort city of Sanya on Hainan Island, recent arrivals have been limited.

Workers at the massive Foxconn (2317.TW) factory that makes iPhones for Apple Inc (AAPL.O) staged a protest in the central city of Zhengzhou, which announced five days of mass testing in eight regions, becoming the latest to resume daily The tested region. millions of inhabitants.

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

Reporting by Beijing and Shanghai newsrooms; Writing by Bernard Orr; Editing by Tony Munroe, Clarence Fernandez and Raissa Kasolowsky

Our Standards: The Thomson Reuters Trust Principles.

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