Covid-19 cases are rising in China but economic impact seen as ‘limited’

INTERNATIONAL DESK: China is seeing a rise in Covid-19 cases for the first time since a “tsunami” of infections over winter, potentially dampening an expected economic boost during the May Day holiday.

The percentage of people testing positive on PCR tests rose to 1.7 per cent on April 20, according to the Chinese Centre for Disease Control and Prevention. That was up from 1.3 per cent a week earlier and 0.7 per cent three weeks earlier.

Experts say it is not clear how serious the latest wave of cases will be, but that it is unlikely to have a major impact on the country’s economic recovery in the coming months.

“Considering the several waves of infections experienced in Europe and the US after they eased Covid-related restrictions, the impact on [China’s] economy will be limited,” according to Larry Hu, chief China economist at Macquarie Capital.

Wang Dan, chief economist at Hang Seng Bank China, said a new wave of cases could have an economic impact, but there would not be lockdowns in response and it would not affect manufacturing.
“It’s mostly down to the global economic performance, which will likely enter a deeper recession after summer,” she said.

“Domestic manufacturing capacity is unlikely to be affected much by Covid. Consumer sentiment will be affected but I don’t think it’s the pillar of China’s recovery,” she said. “Growth largely depends on how housing and manufacturing fares, and neither has much to do with Covid.”

Xu Tianchen, an economist with The Economist Intelligence Unit, said immunity among the population was now much better than during the first wave so a new outbreak was less likely to disrupt economic activity.

“Unless the variant becomes deadly, it is very unlikely that the government will reimpose lockdowns and other restrictions to prevent the spread – that’s what really hurt the economy before the reopening.”

China abruptly scrapped its tough zero-Covid restrictions in December, a move that prompted a tsunami of cases. Until it started rising again this month, the percentage of people testing positive for the virus had steadily fallen from a peak of 29.2 per cent on December 25.

He Qinghua, an official with the National Administration of Disease Control and Prevention, said there was a low possibility of a large-scale outbreak in the short term – even with more people on the move across the country.

A five-day national holiday begins on Saturday, and the transport ministry is expecting passenger traffic to reach levels not seen since 2020.

“Covid cases are slowly rising in certain areas … as immunity from infection decreases in some populations,” He said at a press briefing on Wednesday.

He said those testing positive were mainly people who had not been infected previously, people whose immunity levels had dropped or those with weakened immunity.

CDC researcher Chen Cao said Omicron subvariants BA.5.2 and BF.7 and their subvariants remained the dominant strains in China.

The proportion of XBB variants had increased significantly – from 1.5 per cent of cases logged in early March to 18 per cent in the week of April 10-19.

As of April 22, 57 cases of XBB.1.16 and its subvariants had been detected among local infections, Chen said.
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Mass testing, along with the release of daily case numbers, were abandoned when China ended its zero-Covid policy.
Jin Dongyan, a virologist at the University of Hong Kong, said the situation in China now – and whether there is a second wave – was unclear given the lack of testing and communication of case numbers.

But he noted that “we haven’t seen a country or a region – including Hong Kong, the US, Europe, Russia and Vietnam – having another massive wave within a year or so following a Covid tsunami”.

Jin said a new wave would be expected to have a limited impact in China, and the most important thing would be to get elderly people vaccinated and to have medicine available to treat them if they did get infected.

Zhang Zhiwei, president and chief economist at Pinpoint Asset Management, also said that with no restrictions on movement or testing requirements, a second wave would not have a noticeable impact on the economic recovery.
“The fear among the general public is much less compared to last year.” (SCMP)