China COVID cases rise, with city of Guangzhou on edge

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China’s COVID outbreak continued to widen on Thursday, with new case numbers at their highest since April and authorities in the hard-hit southern metropolis of Guangzhou urging residents to work from home but stopping short of a city-wide lockdown.

Rebounding COVID infections and China’s aggressive response to them are causing disruption for residents and businesses in cities across the country and weighing on financial markets, including for global commodities.

In Beijing, organisers of China’s flagship auto show said the event, already postponed, will not take place this year due to the COVID-19 situation in the capital, which reported 95 new infections for the previous day, up from 80 a day earlier.

While China’s infection numbers are low by global standards- new domestic cases rose to 8,824 on Wednesday – the country continues to stick with its outlier zero-COVID approach, fueling widespread public frustration and inflicting damage on the world’s second-largest economy.

In Guangzhou, home to about 19 million people, cases hit more than 2,000 for a third straight day and officials have launched mass testing, resisting for the time being a city-wide lockdown of the type that paralysed Shanghai for two months earlier this year.

“As things stand, it is hard to tell whether Guangzhou will repeat the experience of Shanghai in spring this year. If Guangzhou repeats what Shanghai did in spring, it will lead to a new round of pessimism on China,” Nomura analysts wrote in a Thursday note.

Mason Long, who works for a Guangzhou gaming company, said some residents are bracing for a lockdown, with many leaving the city or planning to. Most of Guangzhou’s 11 districts are under some form of COVID restriction.

“Panyu district just announced that it’s restricting traveling and out, so that’s three districts to announce that,” says Long. “The rest of us in other districts are super worried this will be applied to the entire city and we’ll be facing a Shanghai-style lockdown.”

Last week, Chinese share prices soared on hopes that China would begin easing COVID curbs, but Beijing continues to reiterate its commitment to what is a signature policy of President Xi Jinping that authorities argue saves lives.

China has yet to spell out an easing strategy or mount the sort of massive new vaccine campaign that experts say is needed before it can begin to open up, with many saying China is unlikely to begin easing until the spring, at the earliest.

Be more targeted:

In Beijing, residents of some areas have been asked to get COVID tests every day this week. Outside one residential compound in the Chaoyang district, aloud-hailer repeatedly squawked: “During this time of large-scale testing, no one is to be left out. Do your COVID test each day.”

A Thursday commentary in the official Xinhua news agency urged Chinese authorities to take a more targeted approach to tackling outbreaks and rectify any extra “layers” of measures.

“All localities will further improve the level of scientific and precise prevention and control, strive to achieve the greatest prevention and control effect at the least cost, and minimise the impact of the epidemic on economic and social development,” Xinhua reported.

On Thursday, Taiwan-based Foxconn said it expected smartphone revenue to fall this quarter and is adjusting production to prevent recent COVID-19 curbs at at its massive Zhengzhou factory, which makes Apple iPhones, from impacting holiday orders.

This month,  Foxconn was rocked by discontent over stringent COVID measures at the Zhengzhou plant, with many of its roughly 200,000 workers there fleeing the site.

Also on Thursday, automaker Haima Automobile said logistics and personnel movements at its Zhengzhou base in central China had been heavily affected by  COVID-19 since October.