China's widening COVID curbs exact mounting economic toll
https://www.reuters.com/world/china/chinas-widening-covid-curbs-exact-mounting-economic-toll-2022-04-06/
European Chamber urges China in letter to review COVID policy
By Josh Horwitz April 11, 2022
SHANGHAI, April 11 (Reuters) - The European Union Chamber of Commerce in China said on Monday it had sent a letter to the country's cabinet detailing how its COVID control measures had disrupted European companies and urged it to revise its policies, such as by allowing home quarantine for some COVID patients.
In a letter dated April 8 and addressed to China's State Council and Vice Premier Hu Chunhua, a copy of which was seen by Reuters and confirmed by the chamber, the chamber said that the "old toolbox of mass testing and isolation" was not able to overcome the challenges posed by the Omicron variant.
It added that a flash survey from the German Chamber of Commerce in China conducted the week prior showed that 51% of German companies' logistics and warehousing and 46% of German companies' supply chains were "completely disrupted or severely impacted by the current COVID-19 situation in China."
China's State Council did not immediately respond to a faxed request for comment.
"The European Chamber is keeping in touch with the relevant authorities and is looking forward to following up on the contents of the letter at the earliest opportunity," a chamber spokeswoman said.
The lockdown curbs have forced factories either to cease operations or to operate via a "closed-loop" in which selected staff stay on site to keep lines running while outside shipments are restricted. Even some closed-loop operations have been affected, however, by suppliers shutting. read more
Reporting by Josh Horwitz in Shanghai; Additional reporting by Samuel Shen in Shanghai; Editing by Toby Chopra and Edmund Klamann
China's foreign firms desperate for shift away from 'old toolbox' of mass testing, isolation to combat Omicron
- EU Chamber of Commerce in China sends letter to Vice-Premier Hu Chunhua and implores leadership to take a less-disruptive course of action
- Recent surveys by other foreign business groups in China have recorded similar sentiments amid a growing public outcry over zero-Covid strategy
The time has come for Beijing to adjust its unwavering zero-Covid policy that has resulted in a serious disruption of economic activities, an influential foreign business association said in a letter to Vice-Premier Hu Chunhua.
The European Union Chamber of Commerce in China sent the letter, dated Friday, amid a growing outcry over disruptions to daily lives and business resulting from measures such as mass testing and large-scale lockdowns.
While acknowledging that Beijing’s zero-Covid policy offered China protection from the Delta variant and fuelled a quick economic recovery in 2020, the chamber also implored leadership to take a different course of action to combat Omicron.
China's widening COVID curbs exact mounting economic toll
By Josh Horwitz and Kevin Yao April 6, 2022
SHANGHAI, April 6 (Reuters) - China's top European business group warned on Wednesday that its "zero-COVID" strategy was harming the attractiveness of Shanghai as a financial hub, echoing analysts voicing caution over the mounting economic toll of the country's coronavirus curbs.
China has for the past month been tackling multiple outbreaks with an elimination strategy that seeks to test, trace and centrally quarantine all positive COVID-19 cases. read more
Nomura estimated on Tuesday that a total of 23 Chinese cities have implemented either full or partial lockdowns, which collectively are home to an estimated 193 million people and contribute to 22% of China's GDP.
The European Union Chamber of Commerce in China said that the strategy was causing growing difficulties transporting goods across provinces and through ports, harming factory output.
Chamber President Joerg Wuttke told a media roundtable that this would likely impact China's ability to export, which could eventually stoke inflation.
"In China, COVID is still associated as if it were the plague. I think there needs a bit more education from the Chinese authorities, to take the fear away in order to make people more comfortable to live with this kind of uncertainty," he said on Wednesday.
TRAVEL RESTRICTIONS
China, which has severely restricted international travel for the last two years, shows little inclination to ease up on its approach for now.
On Wednesday, Wu Zunyou, chief epidemiologist at the Chinese Center For Disease Control and Prevention, said that the epidemic situation would improve soon if China strictly implements existing COVID measures. read more
A handful of economists have lowered growth forecasts for the first half of 2022, as the COVID surge, coming amid persistent property weakness and global uncertainties, makes it harder for China to hit its full-year target of around 5.5%.
Shanghai-based Bank of Communications cut its forecast for China's first-quarter GDP growth from 5% to 4%, with the drop coming solely from slowing activity in March, said senior economist Tang Jianwei.
Shanghai has put strict movement curbs on its 26 million residents, barring them from even leaving their front doors other than for COVID tests.
Dan Wang, chief economist at the Hang Seng Bank China in Shanghai, said the primary ripple effect for now from the city's lockdown was in the financial and legal services sector.
For example, companies looking to go public typically have to work in person with legal teams based in Shanghai - but current travel restrictions make that impossible.
"Macro confidence will collapse if this lockdown continues like this, and it will be reflected in the stock market," she said. "I expect monetary easing happening pretty soon in the second quarter."
