China’s sudden ‘reopening’ reveals new economic challenges

People line up outside a fever clinic in Beijing on December 14, 2022, just days after the country relaxed its covid controls amid sub-zero weather in the capital city.

Yuxuan Zhang | Afp | fake images

BEIJING — Mainland China’s rapid rollback of many covid-related restrictions has been unexpectedly sudden, revealing a new set of economic challenges.

In the past two weeks, central and local government authorities have relaxed several measures that have forced many people to stay at home and businesses to operate mostly remotely. In particular, the central government said last week Negative virus tests and health code checks were no longer required to travel within the country.

Meanwhile, reports of locals falling ill have increased. The city of Beijing said that on Sunday, its fever clinics received 22,000 visits, 16 times more than a week ago.

“This reopening has come quite suddenly and purposefully. It has exceeded our expectations,” said Gang Yu, co-founder and chief executive of 111, an online seller of medicines and healthcare services. That’s according to a CNBC translation of his Mandarin comments.

Shortage of personnel and medicines

Since the end of November, orders for fever-reducing products and related medicines have increased tenfold, Yu said in a telephone interview on Thursday. She said there is an “extraordinary shortage” of medicines that factories cannot meet, a situation that he hopes will last at least another three to four weeks.

Adding to the high demand, dozens of workers at 111 warehouses or offices in different parts of China have tested positive for Covid, creating an “extraordinary shortage” of staff, Yu said.

That’s a different challenge from earlier this year, when widespread Covid lockdowns meant thousands of new orders were stranded at different distribution points each day, Yu said.

China will get through reopening from Covid, but it will be a bumpy ride

Delivery is still slower than normal in some parts of the country.

Even as of Sunday, China’s postal agency said more than 400 delivery points in Beijing and other parts of the country remained closed for Covid-related reasons.

To get an idea of ​​the scale, the postal service said Tuesday it was collecting more than 360 million packages a day — that’s more than one package per person in the US.

We believe that incoming immigration around the Chinese New Year holidays in late January could lead to an unprecedented spread of Covid and severe disruption to the economy. announced on Wednesday that more than 1,000 couriers from other parts of the country had arrived in the capital city of Beijing. Anecdotally, in recent days in Beijing, app-based grocery and food services that usually deliver within an hour were only doing so at much longer intervals or the next day.

Increased infections may offset relaxation

Winter passes first

Social activity remains subdued amid rising infections and sub-zero weather in northern cities. Baidu’s traffic data indicates that most people in big cities like Beijing and Guangzhou have not ventured out, with congestion levels still very low as of Thursday.

The management of Chinese travel booking site was also cautious about how quickly domestic travel would recover.

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“In fact, we’ve seen a very strong sequential increase in domestic flights and hotel bookings over the last two weeks,” they said Thursday, according to a transcript of FactSet’s earnings call.

“But in the very short term, we remain cautious as winter is typically a flat season for both business and leisure travel,” they said.

“And it could also take some time for people to get past the first wave of infections before travel demand can fully unleash and recover. But we anticipate seeing a very good rebound and growth in the domestic travel segment next year.” .

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