China Adheres to Covid Control Measures, Luxury Mall in Beijing Closes

Beijing’s major luxury goods mall SKP, pictured here in 2021, said on Friday it would close – without a reopening date – after the city confirmed three cases of Covid in a nearby apartment building.

Qilai Shen | Bloomberg | Getty Images

BEIJING — China has shown little sign of easing its Covid-free policy as the country continued to grapple with its worst outbreak in two years.

Some enterprises have resumed production in Shanghai and northern China. But the capital, Beijing, temporarily closed a large luxury mall and non-essential businesses in the same area on Friday to control an ongoing surge in cases linked to the highly contagious omicron variant.

China’s top leaders said at a meeting on Friday that Covid and the Ukraine crisis have exacerbated problems and uncertainty for the domestic economy, according to state media. Chinese President Xi Jinping has chaired a regular economic meeting with the Chinese leadership, known as the Politburo.

The leaders noted the new characteristics of the mutation and said the country should stick to its “dynamic zero Covid policy,” state media reported.

This means that Covid policy will not ease up anytime soon, said Bruce Pang, head of macroeconomic and policy research at China Renaissance. He said the meeting reflects that the impediment to growth is stronger than previously expected, and prominent leaders have called for more political support to enable China to meet its GDP target of around 5.5%.

Many investment banks cut their China GDP forecast to 3.9% due to new Covid cases and control measures.

Mainland China reported more than 5,600 new confirmed Covid cases with symptoms on Thursday, with most of them linked to cases in Shanghai that were previously asymptomatic.

The southeastern metropolis, home to the world’s busiest port, has kept residents mostly locked down for more than a month in an attempt to control a local outbreak. Other parts of the country, including Beijing, have put areas on lockdown, conducted mass virus tests and restricted travel in an attempt to control new spikes in cases.

Beijing has reported two new asymptomatic and 47 symptomatic Covid cases, matching the daily count for much of the past week. New cases have been reported in more than 15 other provincial-level regions, including Shandong, Guangdong and Zhejiang provinces with large export volumes.

Specific measures to combat the virus may “sacrifice” the convenience of life for some regions and people, which will affect the economy of some localities in the short term, Liang Wannian, head of the Covid response expert group at the National Health Commission, said at a press conference. Friday.

But it will allow the largest area and number of people to work and live normally, for a cost-effective balance, he said.

Liang on Friday described the virus situation in Shanghai and Beijing as improving significantly. He said a dynamic zero Covid policy does not mean zero contagion, as options like omicron mean authorities cannot guarantee that no cases will appear.

Factories in Shanghai are gaining momentum

Shanghai has attempted to allow some large enterprises to resume production, publishing a list of 666 companies about two weeks ago that could be given priority to resume operations.

Just over a third, or 247, of companies are funded from abroad, the Commerce Department said Thursday.

German automaker Volkswagen and American electric vehicle company The ministry said Tesla has resumed production, noting that other foreign companies have applied to join the second group of whitelisted companies. The ministry said they would make every effort to resume work.

  • U.S. chemical company DuPont said on Thursday that all of its manufacturing facilities in China are either operating under normal conditions or in a bubble. The company said early last week that its manufacturing sites in Shanghai had not yet resumed production.
  • German chemical giant BASF said most of its employees in Beijing have been working from home since Monday, and that most of its production sites in China, including in Shanghai, continue to operate, albeit with some production cuts.
  • On Monday, German automaker Volkswagen said it had begun resuming production at its plant on the outskirts of Shanghai, while its factories in northern China’s Changchun were ramping up output. The company did not respond to a request for an update from CNBC on Thursday.

The city of Changchun in northern Jilin province began resuming normal operations on Thursday after several weeks of lockdown, according to the official announcement.

Delivery of trucks between ports and factories remains a challenge.

Merchants are having to pay more for logistics costs — which are about 25% of selling prices now, compared to 15% or 20% at the beginning of the pandemic,” Diane Wang, founder and chairman of Chinese e-commerce site DHgate, told CNBC on Thursday. . The company mainly works with small Chinese companies trading overseas.

With stocks in place, stay-at-home and lockdown orders need to be in place for at least three months to really impact business, she said.

Beijing on alert

Learn more about China from CNBC Pro

State media said gyms, movie theaters and other non-essential businesses in the area were to close while the city conducted mass tests of residents and employees there until Tuesday, May 3. The report did not mention stay-at-home orders, but it did scare people away from going out.

Nearby, in the area of ​​one metro station south of the main business center, local authorities have extended the quarantine, which began on Monday, until the upcoming Tuesday, May 3. The authorities also expanded the quarantine zone a little further south.

The above affected areas are in Beijing’s main business district, where three days of mass testing began on Monday.

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