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China braced for renewed lockdowns as Omicron subvariant spreads

China is at risk of more frequent lockdowns and mass testing as officials struggle to contain the spread of the highly transmissible BA.5 Omicron subvariant, experts said, despite the damage restrictions have already wrought on the world’s biggest consumer market.

Forty-one Chinese cities are under full or partial lockdowns or district-based controls, covering 264mn people in regions that account for about 18.7 per cent of the country’s economic activity, according to an analysis released on Monday by Japanese investment bank Nomura.

That marked a deterioration from the situation a week ago, when curbs were imposed in 31 cities covering 247.5mn people and representing 17.5 per cent of the economy.

China’s zero-Covid policy, which aims to eradicate coronavirus completely, has heaped pressure on officials to stamp out chains of transmission and put strains on the world’s second-biggest economy.

The country narrowly escaped a contraction in the second quarter, expanding 0.4 per cent year on year in the three months to the end of June. That was down from 4.8 per cent in the first quarter, data showed on Friday, reflecting the sweeping costs of the recent Shanghai lockdown, supply chain disruptions and reduced mobility nationwide.

China recorded 1,090 Covid-19 cases over the weekend. But the number, while relatively low compared with outbreaks in other countries, was enough to trigger the resumption of restrictions in cities across the country under the zero-Covid regime.

Shanghai’s city government has ordered mass testing across more than half of its districts. The announcement sparked fears among the financial hub’s 26mn residents that a return to extensive lockdowns was imminent, just weeks after they emerged from a two-month period consigned to their apartments and compounds.

“People joke that so long as you’re in lockdown, you’re free from the fear of being locked down,” said one Shanghai finance professional who asked not to be named. The professional added that locals no longer trusted the local government after its “mismanagement” in March and April.

In Tianjin, south-east of Beijing, the city’s 16mn residents were ordered on Monday to undergo testing and mobility was restricted after two cases were detected. A lockdown was imposed over the weekend in the popular southern tourist destination Beihai and another was extended in Lanzhou, a north-western city of 4mn.

Yanzhong Huang, senior fellow for Global Health at the Council on Foreign Relations think-tank, said the spread of BA.5 cases in more Chinese cities indicated a “new wave of Covid outbreaks”.

“Under the current zero-Covid strategy, [this] will trigger more frequent and extensive government interventions including mass PCR testing and lockdowns,” said Huang.

Denis Kinane, professor of immunology and pathology and co-founder of Cignpost Diagnostics, said rapid mutations of the Omicron variant were exacerbating the challenge posed by China’s vast numbers of unvaccinated elderly.

“Whilst China’s stringent lockdowns and border controls had delayed an outbreak of this variant . . . I expect BA.5 to become the dominant strain in China over the next few months,” Kinane said.

According to Goldman Sachs data, Chinese cities with districts classified as mid- to high-risk covered just under one-quarter of national gross domestic product.

Property transactions, tracked across 30 cities last week, were down 43 per cent from a year ago, while subway ridership, another indicator of economic momentum, remained down 40 per cent in Shanghai and nearly 30 per cent in Beijing.

However, China’s daily vaccination rate — which analysts say is critical to hastening a change in its Covid policy — has remained at low levels as resources are diverted to mass testing campaigns.

“Zero-Covid is no longer sustainable — the virus has evolved and become more transmissible,” Kinane added. “Countries need to be pragmatic and change measures to reflect this.”

Additional reporting by Maiqi Ding in Beijing and William Langley in Hong Kong

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