Guangzhou and other major Chinese cities are seeing sudden sharp escalations in COVID-19 cases, sparking fears among investors that China will return to sudden and severe lockdowns that hamper economic activity.
Official data released Tuesday showed Guangzhou was in the midst of its worst flare-up ever, as the city sought to avoid a Shanghai-like lockdown.
On November 7th China’s health authority reported that new locally transmitted infections nationwide rose to 7,475, up from 5,496 the previous day. That was the highest since May 1st.
By global standards, the increase was modest, but in China, the nation’s “zero-Covid” policies can lead to such modest outbreaks producing stringent lockdowns and aggressive containment measures.
The sudden rebound in cases will test China’s ability to target its containment measures surgically, to limit further spread, while not impacting wider economic activity in the city. Investors particularly are fearful the world’s second largest economy may soon head back into lockdown mode, unless the government makes a conscious effort to back away from its zero-Covid policies.
Guangzhou, capital of Guangdong province, had 2,377 new local cases as of November 7th, compared to 1,971 the previous day. Just two weeks ago, the sprawling southern Chinese city was seeing only double digit increases in cases. Now the city labeled the “factory floor of the world” is fighting its most serious outbreak ever.
So far, while many districts such as Haizhu at the center of the city have imposed minor targeted curbs and lockdowns, the city has resisted imposing a blanket lockdown which would shut down all economic activity and manufacturing.
The capital of central Henan province, Zhengzhou, which is a major production center for Apple supplier Foxconn, had 733 new cases as of November 7th, which was over double the amount a day earlier.
Beijing had an increase of 64 local cases, and while not enough to trigger lockdowns, it has set off a flurry of testing of residents, as well as building-wide and neighborhood-wide lockdowns in some cases.
In a note Monday, Nomura wrote, “The lockdown situation has continued to deteriorate quickly across the country over the past week, with our in-house China COVID lockdown index rising to 12.2% of China’s total GDP from 9.5% last Monday. We continue to believe that, while Beijing may fine-tune some of its COVID measures in coming weeks, those fine-tuning measures could be more than offset by local officials’ tightening of the zero-COVID strategy.”
