Beijing COVID lockdowns spread concerns over economic fallout

Beijing – With mass COVID testing underway in Beijing after an outbreak of the virus, concerns are growing that lockdowns could be implemented.

With Shanghai currently under lockdown and reporting 19,000 new infections in the past 24 hours, authorities in Beijing are being pressured to stamp out the outbreak as quickly as possible. Outside Shanghai and Beijing, more than 20 cities – home to around 30 million people – are under lockdown. Shanghai is home to world’s busiest port.

China is the powerhouse supplier of home textiles constructed of man-made fibers (MMF), which are a staple of the volume retail business.

The city of Beijing is currently undergoing mass testing for nearly all of its 21 million people. One section of the city is locked down, as are certain individual residential buildings.

“As cases erupt in Beijing, there is concern that prolonged lockdowns will hit employment and lead to a sharp slowdown in growth as well as sparking fresh shipping logjams and supply chain issues,” investment analyst at Hargreaves Lansdown Susannah Streeter told BBC.

In less than a week, several economists at major investment banks have cut their expectations for Chinese growth. The country’s “zero-COVID” approach is adding to the worry.

“The stringently enforced zero-COVID strategy causes a big supply shock to the overall economy, especially to cities under full and partial lockdowns,” the Japanese investment bank’s chief China economist Ting Lu said in a report on Wednesday, CNBC reported.

“This supply shock may further weaken demand for homes, durable goods and capital goods due to falling income and rising uncertainty,” he said.

China’s well-equipped factories, highly-trained labor force, and strong logistics will continue keep it in top contention, even despite tariffs.