Shanghai Orders Staggered Lockdowns After Reporting Record New COVID Cases

March 27, 2022   |   Tags:
Shanghai Orders Staggered Lockdowns After Reporting Record New COVID Cases

Update (2000ET): In an effort to mitigate the economic blowback from its latest lockdown, authorities in Shanghai said that the city's port would continue to operate amid the staggered lockdowns that were ordered on Sunday.

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After weeks of panic-buying for fear that the Communist authorities would order another lockdown, President Xi has apparently tossed his "targeted" approach aside and ordered a lockdown in Shanghai, the country's largest city and its financial hub.

The city of 26 million will be locked down "in two stages" over the span of nine days as authorities try to quash surging COVID numbers. The lockdowns were ordered after the city reported a new record number of infections on Saturday.

During that 24 hours period, the city recorded 2,631 new asymptomatic cases, which accounted for nearly 60% of China’s total new asymptomatic cases that day, plus 47 new cases with symptoms.

Local authorities announced on Sunday they would divide Shanghai into two districts for the purposes of the mass testing, using the Huangpu River that passes through the city as a guide. Districts to the east of the river, and some to its west, will be locked down and tested between March 28 and April 1, while the rest of the city will be locked down and tested between April 1 and 5.

During the lockdowns, public transit will be suspended, including ride-hailing services, according to an announcement from the city government released on its official WeChat account. Personal vehicles will be barred from the roads unless otherwise approved.

While authorities have sought to assuage the public's growing sense of unease, locals have been panic-buying food and other essentials for fear that a new lockdown could be ordered at any time, potentially leaving them confined to their homes (or, worse, to "bubble"-style dormitories in the factories where they work)

As a result of the lockdown order, local companies and factories will suspend manufacturing, or require workers to work remotely during the lockdown, with the exception of those who work in food production or supply, or who provide other essential services.

"The public is asked to support, understand and cooperate with the city’s epidemic prevention and control work, and participate in nucleic acid testing in an orderly manner," the government added.

Western investment banks have been scrambling to gauge the impact of more potential lockdowns in China, and a team from Goldman Sachs recently postulated that continuing lockdowns could wipe an entire percentage point off of annual GDP growth for every four weeks that a lockdown persists.

Meanwhile, a team of analysts from Mizuho warned in a note to clients published over the weekend that the Chinese economy is suffering its worst contraction since COVID first emerged in Wuhan more than two years ago.

Economic activity "may notably deteriorate across the board" in March due to increasing mobility restrictions across China, exacerbated by an ongoing slump in the domestic property market. Outbreaks are hammering a wide range of industries and sectors, including in-person services, construction and some manufacturing activity. The result is that "it's getting harder for Beijing to achieve its 'around 5.5%' GDP growth target for 2022," the economists said. Mizuho now sees a possibility that annualized GDP growth for 2022 could contract to just 2.9%, Bloomberg reports.

More than 14M residents of the city have already taken rapid antigen tests recently, and restive residents have recently started pushing back harder against authorities' constant insistence on testing. Videos of angry crowds pushing through cordons have recently circulated on western social media.

Expect to see more of those as exhausted locals vent their frustration with the CCP's "zero COVID" policy failure.

Tyler Durden Sun, 03/27/2022 - 20:00