Beijing closed a number of bus and metro lines on Wednesday to prevent the spread of Covid-19. This was in an effort to avoid Shanghai, where thousands of people have been locked down for over a month.
There is new evidence that China's intransigent fight against coronavirus has been a hindrance to its growth, as well as the damage it may be causing for international investors. It was first discovered in Wuhan city in late 2019.
Another city issued work-from home and Covid curbs late Tuesday. Zhengzhou is the central city and home of 12.6 million residents. It also houses Foxconn (NASDAQ:), Apple's iPhone maker.
According to service providers, the capital has shut down more than 40 subway stations and 158 buses routes. The Chaoyang area, where the outbreak began in Beijing, is home to most of the routes and stations that have been suspended.
Beijing has a lot of cases and is not trying to lock down like Shanghai initially did. Instead, it hopes that mass testing will identify the virus quickly so that it doesn't spread.
A 22-million population has ordered schools and other businesses to close in the city. Many people have started stockpiling for when a complete lockdown is necessary.
After having completed three mass screenings, twelve of the 16 Beijing districts conducted this week's second round of testing.
Shanghai has no ending for lockdown.
Over a month later, the majority of mainland China's largest city and financial center residents are not permitted to move out of their homes.
Shanghai has 25 million residents. There was a temporary relaxation of the precautions, which allowed one person in a household to go for a short walk, fresh air, and some shopping at local supermarkets.
Shanghai had 63 new cases found outside of areas subject to severe curbs. According to data from the last few days, the city is still on track to achieve the goal.
Authorities claim the zero Covid policy is designed to save as many people as possible. They point out the many Covid-related deaths that have occurred outside of China.
"GROWTH MOMENTUM DETERIORATED"
However, the policy has a negative impact on domestic consumption as well as factory output. It disrupts key supply chains globally and reduces revenues for many of the most important international brands like Apple and Gucci-parent. Kering Yum China Taco Bell Owner Yum China
Capital Economics believes Covid is spreading to regions that produce 40% and 80% respectively of China's exports. All of these areas are subject to various restrictions.
"Recent mobility trends suggest that China's growth momentum deteriorated significantly in April, with traffic congestion, subway passenger volume and other high-frequency indicators at their weakest since the initial outbreak," Fitch Ratings said in a note.
Their 2022 growth prediction was cut to 4.3% by its analysts, which is well below China's official goal of 5.5%.
Starbucks Corp (NASDAQ) suspended Tuesday's guidance regarding the remainder of its fiscal year primarily due to China imposing Covid limits. The sales in China where the chain is expanding rapidly in recent years dropped 23% to overshadow the 12% increase in North America.
Foxconn stated Wednesday that it is continuing Zhengzhou production.
After March's lockdown, many factories had to be shut down. Some factories have reopened, but it has been difficult to get workers back while dealing with slow supply chains.
Shanghai authorities assisted Tesla (NASDAQ:), transporting over 6,000 workers to its factory and carrying out disinfection works to reopen it last month according to a Tesla letter sent to officials, which was seen by Reuters.
The disruption of international trade also affects them.
Royal Bank of Canada Analysts found that around a fifth of all global container ships were in traffic jams at different major ports.
The port of Shanghai saw 344 vessels awaiting their berth. That's a 34% increase in the month. According to them, shipping from China's warehouse to America takes on average 74 days. (This story has been rewritten in order to get rid of extra 'ins'.