China’s Covid outbreak wanes as curbs eased to boost faltering economy

China reported the fewest new Covid-19 cases in almost three months, with the easing of outbreaks in Beijing and Shanghai emboldening authorities to relax some of the strictest virus controls of the pandemic and move to stimulate the country’s faltering economy.

In Beijing, infections dropped to 12 on Sunday, from 21 on Saturday. Curbs on movement in several districts started to be loosened yesterday after officials said the outbreak was under control. The decline has eased concern that Beijing could have been headed for a lockdown when it was reporting several dozen cases a day earlier in the outbreak despite increasingly strict restrictions.

In Shanghai, cases fell to 67 for Sunday from 122 on Saturday. The financial hub on Sunday rolled out a raft of measures to support its lockdown-hit economy, including allowing all manufacturing to restart from Wednesday.

There were 122 cases reported across the country on Sunday, the fewest since March 3. China hasn’t reported a day without infections since October despite its zero-tolerance approach to the virus.

Consumption-related plays led gains in Chinese equities as traders snapped up shares of companies that are positioned to benefit from a gradual resumption of normal life. Still, the benchmark CSI 300 Index was up just 0.4% at the mid-day break, trailing a 1.8% jump in the broader MSCI Asia Pacific Index.

While sweeping curbs have brought Covid’s spread under control for now in China’s two most important cities, the virus has evolved to become far more contagious, said Ben Cowling, chair of epidemiology at The University of Hong Kong’s School of Public Health. That means it’s likely to flare up again and again, making it more difficult to control than it was last year when a less transmissible strain was spreading, he said.

“Beijing and other cities in China would need to be prepared to implement outbreak control measures more often in the coming year than in 2021 because of the increased transmissibility of the virus over time,” Cowling said.

Economic Action

At the weekend, Shanghai said it will accelerate approvals for property projects and increase the quota for car ownership by 40,000 this year. A purchase tax for some passenger vehicles will be reduced and subsidies will be given to electric-car buyers. Covid test requirements will be loosened for people entering public places from June 1 as the city tries to restore a sense of normalcy after a two-month lockdown of its 25 million population.

China’s dogged adherence to its Covid Zero policy at all costs — epitomized by Shanghai’s lockdown and restrictions imposed elsewhere in the country of 1.4 billion — has dragged on everything from consumer spending to manufacturing in the world’s second-largest economy. The harsh curbs, which confined millions of people to their apartments or residential compounds, also sparked clashes between residents and police.

The Shanghai measures come after the State Council, the equivalent of China’s cabinet, outlined a 140 billion-yuan ($21 billion) package of extra tax rebates and loans aimed at stimulating the battered economy. Most economists expect it will be difficult for China to meet its economic growth target of about 5.5% this year because of the disruption wrought by its Covid approach.

In Beijing, most public transport including buses, subways and taxis will resume in three districts including the biggest, Chaoyang. Shopping centers outside of controlled areas will also be allowed to reopen with capacity limits. Chaoyang is one of Beijing’s key central business districts, hosting most foreign embassies and many in the expatriate community.

Some Beijing residents who were required to work from home previously will be allowed to return to their offices, while hotels and hostels in five districts on the city’s outskirts will be permitted to reopen.

Schools and kindergartens will remain suspended and university campuses will stay closed, with students urged to go home before the summer holidays. Dining-in is still banned at restaurants.

Dear Reader,

Business Standard has always strived hard to provide up-to-date information and commentary on developments that are of interest to you and have wider political and economic implications for the country and the world. Your encouragement and constant feedback on how to improve our offering have only made our resolve and commitment to these ideals stronger. Even during these difficult times arising out of Covid-19, we continue to remain committed to keeping you informed and updated with credible news, authoritative views and incisive commentary on topical issues of relevance.

We, however, have a request.

As we battle the economic impact of the pandemic, we need your support even more, so that we can continue to offer you more quality content. Our subscription model has seen an encouraging response from many of you, who have subscribed to our online content. More subscription to our online content can only help us achieve the goals of offering you even better and more relevant content. We believe in free, fair and credible journalism. Your support through more subscriptions can help us practise the journalism to which we are committed.

Support quality journalism and subscribe to Business Standard.

Digital Editor