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Saturday, November 26, 2022

China’s lockdown fuels fears of global impact

BEIJING ( Associated Press) – An investigation into the virus that confined millions of Chinese families to their homes and shuttered businesses and offices has raised fears of further damage in a still-weak global economy.

The Communist Party, which rules the country, promised on 11 November to downplay the impact of its “zero COVID” strategy and make the measures more flexible. But a new wave of outbreaks has tested that aim, and big cities like Beijing have cordoned off crowded districts, shuttered shops and offices and forced factories to isolate their workforces from outside contact. has ordered.

The government on Tuesday reported detection of 28,127 cases across the country in 24 hours, including 25,903 asymptomatic cases.

China has a low number of infections compared to the United States and other large countries. However, the government has stuck to its goal of eliminating infections and isolating all cases, while other governments have eased restrictions on travel and other activities and are trying to live with the virus.

Global markets fell on Monday amid concerns over controls in China and comments by a US Federal Reserve official last week that interest rates may rise more than expected to curb rising inflation.

“Investors fear a fall in demand as a result of a less mobile Chinese economy amid fears of a Covid-related lockdown,” said Fawad Razakzada of StoneX.

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China is the world’s largest trader and a key market for its Asian neighbors. Weak consumer or factory demand could hurt global producers of oil and other raw materials, computer processors and other industrial components, food and consumer goods. Restrictions that limit activity in Chinese ports could affect global trade.

Economic growth accelerated year-on-year to 3.9% in the three months ending September, up from 2.2% in the first half. But activity had already begun to decline again.

Retail spending fell 0.5% from October last year, down from a 2.5% increase the previous month, when many cities resumed controls against infections. Imports fell 0.3% in a sign of weak consumer demand, a sharp decline from 6.7% growth in September.

For its part, Chinese exports fell 0.7% in October as demand from US and European consumers fell due to unusually high interest rate hikes by the Fed and other central banks, which aim to prevent inflation at record levels for several decades. trying.

Guangdong province, an export-oriented manufacturing hub and where the outbreak has been reported, reported 9,022 new cases on Tuesday, or about a third of the national total. This included 8,241 asymptomatic cases.

The government of the provincial capital Guangzhou on Monday suspended access to Baiyun district, where some 3.7 million people live, after identifying sources of contagion in the area.

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Guangzhou announced plans last week to build quarantine centers for some 250,000 people. The city said 95,300 people from Haizhou, another district, would be transferred to hospitals or quarantine centres.

The government of Shijiazhuang, a city of 11 million people southwest of Beijing, said factories that want to operate must apply what the official term “closed-loop management” calls for workers living at their workplaces. That means additional cost of food and accommodation.

Businesses and economists see the change in antivirus controls as a step towards removing the controls that separate China from the rest of the world. But he claims that the target of zero COVID should be maintained till the second half of next year.

Despite government promises of less disruptive measures, businesses are pessimistic about the outlook, according to a survey by researchers at Peking University and financial firm Ant Group Ltd. 2021.

Economists and health experts say the government needs to vaccinate millions of elderly people before lifting controls that keep out most foreign visitors.

Louis Lu of Oxford Economics said in a report, ‘ We do not think the country is ready to open up yet. “We expect Chinese authorities to continue to fine-tune COVID controls in the coming months, then move toward a broader and more general reopening thereafter.”

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