FirstFT: China preps for permanent zero-Covid

How well did you keep up with the news this week? Take our quiz.

China is building hundreds of thousands of permanent coronavirus testing facilities and expanding quarantine centres across many of its biggest cities as part of its zero-Covid policy, despite the economic and human toll on the world’s most populous country.

Residents of Shanghai woke up yesterday to an announcement that lockdown measures and mass testing would be conducted in the Minhang district, home to more than 2mn people, for at least two days. The directive was issued just a week after President Xi Jinping’s administration declared victory in defending the city from the pandemic after a punishing two-month lockdown.

Tough restrictions in scores of cities have driven the country to the edge of recession for just the second time in three decades. But even though measures have been eased in many areas, experts believe the government’s virus infrastructure programme is designed to sustain the mass-testing and quarantine policies through 2023.

Yanzhong Huang, a senior fellow for Global Health at the Council for Foreign Relations think-tank, said such measures demonstrated Beijing’s commitment to zero-Covid “despite this growing social, economic cost associated with this approach”.

“The government believes they could outrun the virus. But we know for the Omicron variant this is not realistic. And for an even more transmissible variant, that will make it even less feasible,” he said.

Share your feedback on this newsletter be emailing firstft@ft.com. Here’s the rest of the day’s news — Emily

The latest on the war in Ukraine

Five more stories in the news

1. ECB takes hawkish turn to counter record-high inflation ECB president Christine Lagarde yesterday announced plans to lift interest rates above zero for the first time in a decade by September. The ECB surprised markets by signalling it was likely to raise rates by half a percentage point in September, in addition to a planned quarter-point rise in July — a bigger increase than expected.

2. State Street knocks down Credit Suisse takeover rumours The US custody bank denied it was in talks to acquire Credit Suisse, knocking back a report that it was pursuing the troubled Zurich-based lender. State Street on Wednesday had initially declined to comment on a report from a Swiss blog that it was preparing an offer, exacerbating sharp moves in the shares of both lenders.

3. Apple goes in-house for lending service Apple is making its biggest move into finance by offering loans directly to consumers for its new “buy now, pay later” product, taking on a role played in its other lending services by banking partners such as Goldman Sachs.

4. Runs on Chinese local banks Thousands of desperate depositors in China have been fighting for almost two months to recover their savings after a bank run that has raised concerns over the financial health of the country’s smaller lenders. Analysts said an economic slowdown sparked by President Xi Jinping’s zero-Covid policy is also worsening the problem.

5. Iran to remove 27 cameras from nuclear facilities Iran has warned the UN atomic watchdog that it is removing 27 cameras used to monitor nuclear activity from its facilities, in an escalation of the Islamic republic’s stand-off with the west.

The day ahead

Inflation figures China and the US will report consumer price index data on Friday. US stocks and government bonds dropped on Thursday ahead of the release. China will also announce producer price index figures. See how your country compares on rising prices with our inflation tracker.

Philippines Independence Day The country will have a public holiday on Sunday commemorating the country’s independence from Spain in 1898.

G7 science ministers meeting Officials will gather in Frankfurt on Sunday to discuss opportunities to collaborate on the study of long Covid, carbon capture and removal, and research “values”, said Bettina Stark-Watzinger, Germany’s minister for education and research. (Science Business)

Join us June 16-17 for the FT Future of Finance, live-streamed from the heart of The Next Web (TNW) tech festival. Register here.

What else we’re reading

Singapore’s wealthy pursue luxury cars despite inflation The price of food, energy and other necessities is soaring globally. But in Singapore, the rich still want luxury cars. People in the city-state are paying the highest amount in decades just for the right to own a premium car, official data showed on Wednesday.

The global race for supercomputing power From modelling climate change to developing products, the capabilities of machines are speeding up as the US, China and Japan jockey for computing speed. China, in particular, has exhibited explosive growth in supercomputing since the late 2000s.

The LME debacle raises serious questions for the City of London This episode threatens to undermine the Square Mile’s claim to ensure a level playing field, writes Gillian Tett. LME’s reforms are sensible, albeit hopelessly belated. But they may not be enough to rebuild confidence.

‘The product is dead. There’s no more Spacs’ Rising interest rates, a weakening stock market and warnings of a regulatory crackdown have fed disillusionment with an earlier frenzy of special purpose acquisition company deals. Now, as some banks adopt a far warier approach, focus is starting to shift to what the future holds for the once hot asset class.

Who would want to own a hotel now? It is still a grim time to be in hospitality after stringent lockdowns and international travel bans slashed demand. But Sonesta, a little-known yet rapidly expanding hotel company, thinks it has cracked the code to post-pandemic travel.

Travel

FT Weekend editor Alec Russell recently visited Athens to see 3,000 years of history — on a tight timeline: just three days. Here’s what was on his itinerary.