People line up outside a fever clinic in Beijing on December 21. February 14, 2022, just days after the country eased its Covid controls amid sub-freezing weather in the capital.
Yuxuan Zhang | AFP | Getty Images
BEIJING — Mainland China’s rapid removal of many Covid-related restrictions was surprisingly sudden, revealing a new set of economic challenges.
Over the past two weeks, local and central government authorities have eased several measures that had forced many people to stay at home and businesses to operate mostly remotely. Notably, the central government said last week Negative virus tests and health code checks were no longer required for travel within the country.
Meanwhile, reports of locals getting sick have increased. The city of Beijing said its fever clinics on Sunday received 22,000 visits, up 16 times from a week ago.
“This reopening came rather suddenly, rather resolutely. It exceeded our expectations,” said Gang Yu, co-founder and executive chairman of 111, an online seller of medicines and healthcare services. That’s according to a CNBC translation of his Mandarin comments.
Shortage of staff and drugs
Since late November, orders for anti-fever products and related drugs have increased tenfold, Yu said in a phone interview on Thursday. He said there was an “extraordinary shortage” of drugs that factories could not keep up with, a situation he said will last at least another three or four weeks.
Adding to the high demand, dozens of workers at warehouses or 111 offices in different parts of China have tested positive for Covid, creating an “extraordinary shortage” of staff, Yu said.
It’s a different challenge from earlier this year, when widespread Covid lockdowns meant thousands of new orders were stuck at different distribution outlets every day, Yu said.
Delivery is still slower than normal in some parts of the country.
Even on Sunday, China’s postal agency said more than 400 delivery outlets in Beijing and other parts of the country remained closed for Covid-related reasons.
For a sense of scale, the Postal Service said Tuesday it collects more than 360 million packages a day, or more than one package per person in the United States.
We believe that in-migration around the Chinese New Year holiday in late January could lead to an unprecedented spread of Covid and serious disruption to the economy.
JD.com reported on Wednesday that more than 1,000 couriers from other parts of the country had arrived in the capital, Beijing. Anecdotally, over the past few days in Beijing, app-based restaurant and grocery services, which typically delivered within the hour, only delivered at much longer intervals, or the next day.
Soaring Infections May Compensate for Calming
“Over the past two weeks, the Chinese government has made a sudden 180-degree turn to end its zero Covid policy, with most national prevention measures completely abandoned,” Nomura’s chief economist said Thursday. for China, Ting Lu, and a team.
“The surge in Covid infections could offset the positive impact of the short-term easing.”
“The rapid spike in infections in major cities could be just the start of a massive wave of Covid infections,” analysts said.
“We expect major activity indices to remain weak or even decline further in December. We believe in-migration around the Chinese New Year holiday in late January could lead to an unprecedented spread of Covid and severe disruption to the economy”.
China on Thursday reported a retail sales decline worse than expected in November, as well as a slowdown in the growth of industrial production and fixed capital investment.
Go through the winter first
Social activity remains subdued amid rising infections and sub-freezing weather in northern cities. Baidu traffic data indicates that most residents of major cities like Beijing and Guangzhou did not venture out, with congestion levels still very low on Thursday.
The management of Chinese travel booking site Trip.com was also reserved about how quickly domestic travel would rebound.
“We’ve actually seen a very strong sequential increase in domestic flights and hotel bookings over the past two weeks,” they said Thursday, according to a FactSet earnings call transcript.
“But in the very short term, we remain cautious as winter is generally a flat season for business and leisure travel,” they said.
And it could also take a while for people to get through the first wave of infections before travel demand can ease off and fully rebound. But we expect to see a very good rebound and growth from the domestic travel segment. next year.
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