Guangzhou Covid-19: China locks down key transport hub;  markets fear economic fallout

Guangzhou Covid-19: China locks down key transport hub; markets fear economic fallout

hong kong
CNN Business

China has locked down a major transportation hub in the south, as the country grapples with its biggest national Covid outbreak since April.

The lockdown also follows rising cases in Beijing, which reported the country’s first Covid deaths in nearly six months.

In recent days, China had just started easing its tough Covid restrictions, which had crippled local and international businesses for months. But experts fear Beijing’s resolve to reopen the country is now weakening as cases rise again. Asian markets and oil prices fell on Monday as investors worried about the prospect of China tightening Covid rules.

Guangzhou, one of China’s largest cities with nearly 19 million people, imposed a five-day lockdown in Baiyun district, home to one of the country’s busiest airports.

Baiyun is also Guangzhou’s most populous district, home to 3.7 million people.

Schools will be closed, public transportation services will be suspended and residents are urged to stay at home, according to a statement released Monday by the Baiyun district government on WeChat.

Lockdown comes as Guangzhou struggles to contain its worst Covid epidemic in three years. Guangzhou reported 8,181 cases on Sunday, bringing its total number of infections to more than 80,000 since Oct. 22.

There are growing fears that cities could come to a standstill again in the world’s second-largest economy. From Guangzhou in the south to Zhengzhou in the central region, surging cases have forced local governments to step up lockdowns in recent days. China reported 26,824 new cases across the country on Sunday.

Beijing, the country’s capital, recorded three Covid deaths over the weekend. His Haidian district canceled in-person classes according to a statement from the district government on Sunday.

Shijiazhuang, the biggest city in the northern province of Hebei, also reimposed a five-day lockdown from Monday, just days after it significantly relaxed Covid rules.

Latest outbreaks could make it harder for China to undo its nearly three-year-long “zero-Covid” policy.

On November 11, the central government eased some of its strict Covid restrictions. The move fueled hopes that China would move away from its draconian zero-tolerance approach, which had crippled its economy and largely isolated the country from the rest of the world in recent years.

Markets rallied following the policy decision, with Hong Kong’s Hang Seng index up 14% over three sessions and entering a technical bull market last Tuesday.

But the new closings hit market sentiment on Monday. The Hang Seng Index (HSI) slipped as much as 3.4% in the morning. It closed down 1.9%. Mainland China’s Shanghai Composite Index lost 0.4%.

Oil prices also fell, with U.S. crude futures falling 0.4% in Asian trading hours on Monday. Brent, the global oil benchmark, fell 0.6%.

“The main driver of the rapid downward momentum is growing unease that China will not ease Covid lockdown policies because infections are rising again,” said Stephen Innes, managing partner at SPI Asset Management.

Goldman Sachs analysts said Monday that the latest news on China’s handling of Covid has been “puzzling” for investors.

“Our main message is that the first stage of reopening could be messy and bumpy, while the rebound after the initial hurdle could be very abrupt,” they added, expecting China’s GDP growth to slow. accelerates from 3% in 2022 to 4.5% in 2023.

CNN’s Beijing bureau contributed to the report.

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