China reopens after zero Covid. But there is a long way to go

Shanghai’s main thoroughfare is deserted during Thursday’s evening rush hour. December 22 February 2022, amid a wave of Covid infections.

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BEIJING — It’s been about two weeks since mainland China abruptly ended most Covid controls, but the country still has a long way to go to return to pre-pandemic normalcy.

In the major cities of Shanghai and Shenzhen, Friday morning rush hour traffic was extremely light, according to Baidu data.

According to Wind Information, the number of subway riders in major cities remained well below the normal range on Thursday.

“Significantly larger-than-expected COVID waves are leading to voluntary social distancing, as illustrated by the empty streets in Beijing in mid-December,” analysts at S&P Global Ratings said in a report on Wednesday.

“While this wave may subside in the coming weeks, a resurgence during the Lunar New Year Festival in late January 2023 is likely,” the analysts said. “It will be the first time in nearly three years that mass migration will resume in China as families gather.”

On Dec. Feb. 7, Chinese authorities scrapped virus testing and health code check requirements for domestic travel, among other relaxations of the increasingly strict zero-Covid policy. Meanwhile, local infections increased, particularly in Beijing.

China reopening: It will be a bumpy road to normalization, analyst says

In a week, more than 60% of employees at a Beijing-based company have tested positive for Covid, said Michael Hart, president of the American Chamber of Commerce in China.

“Two weeks later we can get people back into the office,” he said on Friday. “Basically, we went under very quickly. Looks like we’ll be back on our feet very quickly.”

Traffic in Beijing on Friday morning had recovered slightly compared to a week ago, pushing the capital back to the top spot as the nation’s most congested country, Baidu data showed. But the figures showed that congestion levels in Beijing were still about 25% lower than last year.

The lifting of strict COVID restrictions is positive for China’s economic activities. However, a resurgence of infections could dent profits.

In a March 12 survey of nearly 200 members of AmCham China. Between the ages of 16 and 19, more than 60% of respondents said they expected the effects of the recent Covid outbreak to be over in one to three months, Hart said .

Respondents had not reported any major supply chain issues, Hart said, noting that many companies were likely to have stocked more inventory following disruptions from the Shanghai lockdown earlier this year.

However, he said most respondents said they were unable to predict the long-term impact of the outbreak on their business at this time.

Regarding foreign direct investment in China, Hart said he expected it would take about a year for such investment to recover once travel fully reopened.

China has yet to change its quarantine policy for international travelers to the mainland. Arrivals are currently required to quarantine for five days at a central facility, followed by three days at home.

Travel on the rise

Other data pointed to an increase in domestic travel.

Bookings for flights departing from Beijing from Monday to Wednesday rose 38% from the previous week, while economy fares jumped 20%, according to Qunar data quoted by Chinese media Sina Finance. CNBC could not independently confirm the report.

Chinese travel site Trip.com said that from Dec. 12 to Dec. 18, flight bookings for the tropical island province of Hainan surged 68% month-on-month. According to Trip.com, hotel bookings in Hainan rose 20% last week from the previous week.

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While the city of Beijing appears to be emerging from a Covid wave, outbreaks have hit other parts of the country.

In the southern cities of Shenzhen and Guangzhou, there are far fewer people on the streets, said Klaus Zenkel, vice president of the EU Chamber of Commerce in China and chair of the South China chapter. He estimated that road traffic had decreased by 40%, implying an infection rate of around 60%.

Most companies are following guidelines that only ask employees to stay home if they have a fever or severe Covid symptoms, Zenkel said Thursday. “That means [the] Staff will be reduced, just hope that not everyone gets sick at the same time.”

lack of data

There are few official figures on the rise in infections or deaths from China’s recent Covid outbreak.

World Health Organization emergencies director Mike Ryan said at a briefing on Wednesday that China is unlikely to be able to keep up with the surge in infections.

“In the current case in China, relatively few hospitalized cases or relatively few cases in intensive care units are reported, while there are anecdotal reports that these intensive care units are filling up,” Ryan said, according to an official transcript.

“In a fast-moving wave, maybe three days ago you would have reported that your hospital is fine,” he said. “It may not be okay this morning because the wave has come and suddenly you have a very high infection power.”

Most people tested themselves for the virus after most mandatory tests were removed. Last week, the National Health Commission also stopped reporting asymptomatic cases.

“The government was [holding] Daily press conferences telling you how many people were infected,” AmCham’s Hart said. “Then they went to no information.”

He said the lack of official announcements made it easier for rumors to spread. Hart also said interactions with government groups suggested their offices were becoming infected and implementing work-from-home at a similar pace as companies had seen.

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