Beijing teeters on edge of Covid lockdown

The coronavirus pandemic is creeping closer to the halls of power in Beijing as authorities rush to avoid an uncontrolled Shanghai-style Omicron outbreak in China’s capital.

Beijing is tightening coronavirus restrictions after reporting 41 cases on Sunday. Officials in the city of 22mn, which is also home to the ruling Chinese Communist party’s senior leaders, closed gyms and cinemas and raised Covid-19 testing requirements in an effort to avoid the situation in Shanghai, where tens of millions have been restricted to their apartments.

The new wave of social and health controls in Beijing marked the latest sign that China’s leadership remained committed to the heavy-handed implementation of President Xi Jinping’s zero-Covid policy. That is despite indications that the policy is wreaking widespread economic damage within and beyond China’s borders and drumming up domestic opposition to the government’s handling of the pandemic.

Authorities in Beijing ordered three rounds of citywide PCR tests last week after a cluster of cases was found in the business district of Chaoyang. The capital’s daily case count has remained in double digits for the past seven days.

Residents returning to schools and offices on Thursday after this week’s three-day public holiday will have to present a negative Covid test taken within 48 hours. Indoor dining was banned during the holiday in another attempt to slow the outbreak.

The ratcheting up of controls in Beijing followed small-scale protests that have flared in Shanghai amid food shortages, as well as online complaints over Xi’s policy.

Many Shanghai residents have been unable to access medical care after hospital workers were requisitioned to carry out mass Covid-19 tests and staff the quarantine centres.

On Sunday, a viral video that caused outrage on Chinese social media hinted at the chaos behind the scenes at the city’s hospitals.

The clip shows a yellow body bag being wheeled to a black car before two staff members unzip the bag and roll it back into the Shanghai hospital. Local officials on Monday confirmed that someone had mistakenly been put in a body bag while still alive.

After weeks of lockdown in some regions hit badly during the initial Omicron wave, including Shanghai, Jilin and Zhejiang, official case numbers are falling.

But even as life in the cities showed fledgling signs of revival, vital logistics routes that connect buyers and suppliers remained choked. Chinese authorities have also limited traffic between cities to prevent importing infections, leaving factories without crucial components for manufacturing.

Official economic data released on Saturday showed manufacturing and services activity at their lowest levels since the pandemic exploded from Wuhan, central China, in early 2020.

China’s purchasing managers’ non-manufacturing index, composed of the services and construction sectors, fell to 41.9 in April, deteriorating from 48.4 the month before and well below the 50-point threshold that indicates expansion rather than contraction.

The manufacturing PMI, a crucial gauge of factory activity in the world’s most important growth engine, dipped to 47.4 from 49.5 in March, National Bureau of Statistics data showed.

The data highlighted how weak consumer sentiment and immense supply disruptions were battering the world’s second-biggest economy.

The rising pressures are already eroding confidence in Beijing’s ambitions of reaching growth of 5.5 per cent this year — its lowest target in 30 years — as well as forcing China into a series of stimulus measures and weakening the renminbi.

Economists have warned that the economic shock from the latest lockdowns could be worse than the aftermath of the Wuhan outbreak two years ago. This is because many high-tech and automotive manufacturers are located near Shanghai, which has faced restrictions for several weeks during an ordinarily busy period for the country’s factories.

Wang Zhe, a senior economist at Caixin Insight Group, also noted rising distress in China’s labour market and inflation, exacerbating problems for economic planners in Beijing.

“Some companies indicated that demand was weak due to Covid outbreaks, and some said the main problem was the difficulty of getting workers back on the job,” Wang said. “Employment has declined in eight of the last nine months, including April.”

Additional reporting by Andy Lin in Hong Kong