Beijing
In the last few weeks, China has seen its worst COVID outbreak since the initial height of the pandemic in early 2020 when the economy slumped. The latest surge in cases could hit first-quarter gross domestic product by at least half of a percentage point. The strict lockdowns are likely to cost the country at least USD 46 billion a month or 3.1 per cent of GDP and the impact could be double if more cities tighten restrictions according to an economist at the Chinese University of Hong Kong.
The Lockdown of Shanghai’s 26 million people is testing the limits of China’s hardline “zero-COVID” strategy, which is shaking markets far beyond the country’s borders. China’s largest city alone could reduce China’s real GDP by 4 per cent. Millions of Shanghai residents have to stay home and undergo coronavirus testing as the financial hub tries to stamp out a growing Omicron outbreak.
Trucking data in Shanghai, nearly 2 million trucks that crisscross China and whose movements are highly correlated with local economic activity, indicates economic activity fell 40 per cent below normal even before the lockdown began, according to the estimates. As per the report, more cities may follow Shenzhen’s approach, stopping public transportation and preventing people from entering and leaving the city. The lockdown will deal a double blow to consumption and production, and its spillover effect will increase the risk to the global supply chain, the report warned.
In Changchun, the capital of Jilian province, which imposed a lockdown over Omicron cases on March 11, economic activity levels plunged over 66 per cent from normal levels. Over 9 million residents were confined to homes and undergo three rounds of mass testing, while non-essential businesses have been closed and transport links suspended. Changchun, the industrial centre of northeast China accounted for 11 per cent of China’s annual auto production.
