China’s COVID infections hit record as economic outlook darkens

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BEIJING, Nov 24 (Reuters) – China reported a record number of COVID-19 infections on Thursday, with cities nationwide imposing localized lockdowns, mass testing and other restrictions, fueling frustration and darkening the outlook for the world’s second-largest economy.

The resurgence of infections, nearly three years after the pandemic emerged in the central city of Wuhan, is casting doubt on investors’ hopes that China will soon ease its rigid zero-Covid policy despite recent more targeted measures.

The curbs are taking a toll on stranded residents as well as production at factories, including the world’s largest iPhone factory, which has been rocked by clash between workers and security personnel in a rare show of discord.

“How many people have the savings to support them if things stay at a standstill all the time?” asked a 40-year-old Beijing man named Wang, who is a manager in a foreign company.

“And even if you have money to stay at home every day, that’s not true living.”

The streets of Chaoyang, the capital’s most populous district, have been increasingly empty this week.

Sanlitun, an upscale shopping district, was almost silent on Thursday but for the whirring of the e-bikes of delivery riders ferrying meals to those who work from home.

Brokerage Nomura cut its fourth-quarter China GDP forecast to 2.4% year-on-year from 2.8% and cut its full-year growth forecast to 2.8% from 2.9%, well below China’s official target of around 5.5% this year.

“We believe reopening is likely to remain a lengthy process with high costs,” Nomura wrote, also lowering its China GDP growth forecast for next year to 4.0% from 4.3%.

China’s leadership has stuck to zero COVID, a signature policy of President Xi Jinping, even as much of the world tries to coexist with the virus, saying it is necessary to save lives and prevent the medical system from being overwhelmed.

Recognizing the pressure on the economy, the government said China would spend timely cuts in banks’ liquidity reserves and other monetary policy tools to ensure adequate liquidity, state media said on Wednesday, a hint that a reduction in the reserve requirement ratio (RRR) may be coming soon.

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Wednesday’s 31,444 new local COVID-19 infections broke a record set on April 13, when Shanghai’s commercial hub was crippled by a city-wide lockdown of its 25 million residents that would last two months.

This time, however, major outbreaks are far-reaching, with the largest in the southern city of Guangzhou and southwestern Chongqing, although hundreds of new infections are reported daily in cities such as Chengdu, Jinan, Lanzhou and Xian.

While official case numbers are low by global standards, China is trying to eradicate any chain of infection.

It recently began loosening some norms on mass testing and quarantine as it looks to avoid sweeping measures such as city-wide lockdowns, such as in Shanghai this year.

More recently, cities have used more localized and often unannounced shutdowns. Many people in Beijing said they had recently received notices of three-day shutdowns of their residential complexes.

The far northeastern city of Harbin announced the cordoning off of some areas on Thursday.

Many cities have returned to mass testing, which China had hoped to cut back as costs rise. Others, including Beijing, Shanghai and Sanya on the resort island of Hainan, have restricted movements of recent arrivals.

Nomura estimates that more than a fifth of China’s GDP is under lockdown, a proportion larger than the UK economy.

“Full Shanghai-style shutdowns could be avoided, but they may be replaced by more frequent partial shutdowns in a growing number of cities due to rising COVID case numbers,” its analysts wrote.

The central city of Zhengzhou, where workers at the massive Foxconn (2317.TW) factory that makes iPhones for Apple Inc (AAPL.O) staged protests, announced five days of mass testing in eight districts, and became the latest city to revive daily testing for millions of residents.

Reporting from Beijing and Shanghai newsrooms; Writing by Bernard Orr; Editing by Tony Munroe and Clarence Fernandez

Our standards: Thomson Reuters Trust Principles.

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