BEIJING, May 26 (Reuters) – Pandemic-hit Shanghai, China’s financial hub, on Thursday unveiled more post-lockdown plans moving toward a return to normalcy, but a nationwide economic recovery is still a long way off , increasing the sense of urgency for more support.
China’s largest city by economic output has suffered from the lockdown imposed in early April. Other cities not in lockdown but still constrained by COVID curbs, including Beijing, have also struggled as the highly transmissible omicron prompted stronger responses from public health officials this year.
As the government refuses to relax its zero-tolerance stance on COVID, factories and businesses have been hit by disruptions caused by lockdowns, endless mass testing and restricted mobility for large swathes of the population.
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Shanghai is expected to finally emerge from its lockdown on June 1 after a sharp drop in new infections. The megacity of 25 million has cautiously allowed more residents to venture out and returned more vehicles to the once-busy streets and boulevards.
City officials said Thursday junior and senior high school students could return to offline classes starting June 6, after announcing earlier in the week that malls and department stores would be allowed to reopen from June 1, albeit in batches.
ECONOMIC LIFE
As the focus turns to recovery, Premier Li Keqiang on Wednesday offered a somber view of the world’s second-largest economy, saying the difficulties it faces in some aspects are even greater than in 2020, when China returned to power first hit by the COVID-19 outbreak.
Many private sector economists expect April-June gross domestic product to contract year-on-year from first-quarter growth of 4.8%.
China will strive to achieve “reasonable” GDP growth in the second quarter, Li told thousands of government officials across the country in an online conference.
“The unusual gathering caps an increasingly urgent series of official statements over the past few days trying to resolve the economic disruptions caused by the wave of COVID-19 lockdowns,” research group Gavekal Dragonomics wrote in a note Thursday.
“The urgent high-level focus on stabilizing growth opens the door for more aggressive stimulus measures to be deployed in the coming weeks.”
Underscoring the tension between economic and COVID policies and the sensitivity surrounding their discussion, state television sharing of reports of Li’s conference call on social media was temporarily blocked on China’s heavily monitored internet.
Some online groups on China’s popular WeChat mobile app also banned the sharing of unconfirmed transcripts — audio or written — from the conference, as well as discussions about the event, fearing their accounts would be suspended.
TRADE SECRET
“Macroeconomic confidence in China, meanwhile, has deteriorated to the point where what is needed is not easing on the fringes of these broader policy priorities, but comprehensive policy about-turns,” JPMorgan said in a comment.
The central bank on Thursday said it would encourage more lending to smaller businesses and urged financial institutions to prioritize lending to central and western regions and areas and sectors hit by COVID outbreaks.
The finance ministry also said Thursday it would offer subsidies to Chinese airlines from May 21 to July 20 to help them weather the coronavirus-induced downturn and higher oil prices.
Domestic air travel has fallen sharply due to lockdowns in Shanghai and surrounding cities. Shanghai-based China Eastern (600115.SS) said April passenger numbers fell 90.7% from a year earlier. Continue reading
Total air passenger traffic fell nearly 85% year-on-year last month and stood at nearly 15% of its pre-COVID level in 2019, China’s aviation authority said on Thursday.
In a ray of hope, the China Passenger Car Association said on Thursday that national vehicle sales rose 34% in the first three weeks of May compared to the corresponding period in April. Continue reading
But as measures to combat COVID outbreaks squeezed revenue, sales volume was still 16% lower than 12 months earlier, the industry body warned.
Road freight and express delivery from distribution centers were both stronger last week than the month before, but still strong year-on-year, Nomura Global Economics said.
“Unless China relaxes its COVID policy, all other policies are of little value right now,” said an automotive fasteners factory owner surnamed Zheng in eastern Zhejiang Province.
“Everyone has little confidence or enthusiasm to invest now.”
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Reporting by Ryan Woo, Stella Qiu, Winni Zhou, Yan Zhang, Ellen Zhang, and Brenda Goh; Edited by Raju Gopalakrishnan and Gareth Jones
Our standards: The Thomson Reuters Trust Principles.
