China is facing pockets of resurgence in major cities from Beijing to Wuhan, and authorities have imposed mass testing and widespread travel restrictions in some areas.
Daily Covid-19 cases are rising again as the delta variant spreads across the country.
China’s National Health Commission said it confirmed 96 Covid cases on Wednesday — the third straight day it reported 90 cases and above. Of the newly confirmed cases, 71 were locally transmitted, said the health commission.
Economists are concerned that a strict government clampdown on movements could hurt the economy — the only major economy to grow last year.
“China has shown before that it is willing to take tough action to control Covid, and we don’t doubt that it will do so again this time,” Robert Carnell, regional head of Asia-Pacific research at Dutch bank ING, said in a note on Wednesday.
“Tough restrictions on movement and travel already in place will likely bring the desired results. But the delta variant is a particularly slippery little critter, and the concern for us, and we imagine, many others, is how quickly this will occur, and at what economic cost in the meantime,” he added.
When Covid-19 first emerged in the country in late 2019, authorities used strict lockdowns and mass testing to control the nationwide outbreak.
Since then, Chinese authorities have clamped down hard on any flare-ups in Covid infections. The latest spread of the more transmissible Covid delta variant has again led authorities to tighten containment measures across the country.
State media Xinhua News Agency reported that authorities have urged people to limit travel and avoid gatherings, as well as suspended some flights, trains and long-distance bus services.
The capital of Beijing imposed strict entry and exit controls on Sunday and is said to be at a “critical stage” of epidemic control after cases rose late July for the first time in months, Xinhua reported.
Wuhan city, where the coronavirus first emerged, will test all its residents for Covid new cases emerged, the news agency said.
As of July 20, more than 17 million doses of Covid vaccines have been administered in Wuhan, and the vaccination rate of those 18 years and above hit 77.63%, according to the Wuhan municipal health commission.
‘Slow patch’ in China’s economy
China’s economic recovery has been uneven, with exports-oriented sectors driving most of the growth while domestic consumption has been slower to return.
The resurgence in Covid-19 infections and the latest containment measures would delay a recovery in Chinese household spending, said Sian Fenner, lead Asia economist at consultancy Oxford Economics.
China’s household spending recovery likely to be delayed amid delta variant
“The geographical spread of the delta variant is going to be concerning the Chinese authorities. We’ve already seen that they have a very low tolerance towards, you know, even a relatively small flare up,” she told CNBC’s “Squawk Box Asia” on Wednesday.
“We had hoped that with the increase in vaccination rates, that would actually improve that service consumption, but it looks like we’re in for another sort of slow patch going forward and … the delayed recovery in household spending,” she added.
Fenner said she’s maintaining her full-year growth forecast of 8.4% for China for now. That’s slightly higher than the International Monetary Fund’s projected growth of 8.1% in China.
