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Covid-Related Lockdowns In China Causing A Lowering Effect On The Country's Economy

Covid-Related Lockdowns In China Causing A Lowering Effect On The Country's Economy
According to Nomura, China's Covid lockdowns are having a lessening impact on the economy for the first time since early October.
However, analysts at a Japanese bank warned that the road ahead will be difficult because China does not appear to be prepared for an increase in infections.
According to Nomura's Chief China Economist Ting Lu and a team, the negative impact of China's Covid controls on its economy has dropped to 19.3% of total GDP, down from 25.1% a week ago.
According to Nomura's model, last week's 25.1% figure was higher than the two-month Shanghai lockdown in the spring. In early October, the figure was much lower, hovering around 4%.
Local governments have eased a few virus testing standards in recent days, allowing residents of cities such as Beijing and Zhengzhou to use public transportation without being required to provide proof of a negative test result.
In case residents of Beijing test positive for Covid-19, they are being increasingly quarantined at home rather than at a centralized facility.
As of Tuesday morning, proof of a negative Covid test within the previous two or three days was no longer required to enter public areas such as malls. However, the initial level of implementation varied.
China has indicated that a gradual relaxation of its stringent Covid controls may be on the way. In mid-November, the country shortened quarantine periods. A vice premier downplayed the severity of the Omicron variant last week.
However, the country has also reported an increase in virus infections, which have reached daily record highs in recent weeks. The number of reported cases has decreased in recent days, owing to a decrease in mandatory virus testing.
 “Ending zero Covid is encouraging and should be quite positive for markets, but we caution that the road to reopening may be gradual, painful and bumpy,” the Nomura analysts said.
“Despite the substantial resources devoted to the heavy-handed ZCS over the past two years, China does not appear to be well prepared for a massive wave of Covid infections, and it may have to pay for its procrastination on embracing a ‘living with Covid’ approach.”
Covid controls vary greatly across China's cities and districts. More restaurants in Guangzhou can reopen for dining, whereas most in Beijing only offer takeout.
Both cities' schools continue to be largely online.
According to Nomura analysts, current lockdown measures affect 452.5 million people, down from a much higher 528.6 million a week ago.
While these figures exceed those of many countries, they only represent about one-third of China's population.

Christopher J. Mitchell

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