February 8, 2023

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China claims Covid victory in Shanghai despite recession risks  

2 min read

China has declared victory in defending Shanghai from the coronavirus pandemic, underscoring Beijing’s unrelenting commitment to its zero-Covid strategy despite the economy teetering on the edge of recession and millions remaining under lockdown in parts of the country.

The People’s Daily, the official newspaper of the ruling Chinese Communist party, and other state media heralded the “great achievements . . . made in the defence of Shanghai” and reaffirmed support for the controversial policy of completely eradicating Covid-19.

The claims came as many of the city’s 26mn residents emerged this week after two months of lockdowns in response to a wave of the highly infectious Omicron variant. Daily cases numbers fell to a three-month low of 61 on Wednesday, from a peak of about 30,000 in April.

But economists warned that the costs of the zero-Covid policy would mount, with the widespread construction of testing and quarantine facilities further denting hopes of a swift return to normality.

China is on the edge of entering a recession this quarter for the first time since the start of the pandemic in 2020 and for just the second time in three decades.

Alicia García-Herrero, chief economist for Asia-Pacific at Natixis, warned against expecting a “V-shaped recovery” from the world’s second-biggest economy and biggest consumer market if President Xi Jinping’s anti-Covid policy remains in place.

“People didn’t think this would happen because [the zero-Covid policy] is a crazy idea for a country like China . . . Frankly, as an economist, I thought people by now have learned how costly lockdowns are,” she said.

In response to a surge in Omicron cases in March, sweeping restrictions were placed on about 345mn people and nearly 50 cities were put under full or partial lockdowns, according to Nomura data. As the caseload has eased, the number of people still under lockdown has declined to…

2022-06-02 02:21:55

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