Readings and Current Events
China Zero-COVID
China’s Great ‘Zero-Covid’ Guessing Game (New York Times)
It is the great economic guessing game about China: When will the Chinese government ditch its zero-tolerance approach to Covid-19?
Companies and manufacturers are worrying about their profits, while uncertainty is rippling through financial markets. Global leaders and policymakers are sizing up Beijing’s moves as part of their own growth calculations, given China’s central role in the global economy.
China’s manufacturing hub Guangzhou partially locked down as Covid outbreak widens (CNN)
China’s southern metropolis of Guangzhou has locked down a third district, as authorities rush to stamp out a widening Covid outbreak and avoid activating the kind of citywide lockdown that devastated Shanghai earlier this year.
Guangzhou reported 2,637 local infections on Tuesday, accounting for nearly one third of new cases across China, which is experiencing a six-month high in infections nationwide.
The city of 19 million has become the epicenter of China’s latest Covid outbreak, logging more than 1,000 new cases – a relatively high figure by the country’s zero-Covid standards – for four straight days.
China's Guangzhou brings back mass testing to fight city's worst COVID outbreak (Reuters)
Millions of residents of China's southern manufacturing hub of Guangzhou were told on Wednesday to get tested for COVID-19, as infections topped two thousand for two days running in the city's worst outbreak so far.
As local cases across China reached their highest level since April 30, authorities announced on social media that five districts representing more than half Guangzhou's population of almost 19 million would need to undergo mass testing.
China iPhone Plant Remains in High-Risk Area as Lockdown Lifted (Bloomberg)
The world’s biggest iPhone factory will continue to be subject to Covid restrictions, after authorities in China lifted a lockdown in the district where the plant is located but said some areas were still regarded as high risk.
The city of Zhengzhou ended a district-level lockdown order for the area around the airport, the government said in a statement Wednesday. Still, several areas within that district will remain classed as “high risk,” which under the city’s Covid rules means they will continue to be subject to lockdown-like curbs. That includes restrictions on people leaving their homes.
China Weighs Gradual Zero-Covid Exit but Proceeds With Caution, Without Timeline (Wall Street Journal)
Chinese leaders are considering steps toward reopening after nearly three years of tough pandemic restrictions but are proceeding slowly and have set no timeline, according to people familiar with the discussions.
Chinese officials have grown concerned about the costs of their zero-tolerance approach to smothering Covid-19 outbreaks, which has resulted in lockdowns of cities and whole provinces, crushing business activity and confining hundreds of millions of people at home for weeks and sometimes months on end. But they are weighing those against the potential costs of reopening for public health and support for the Communist Party.
China Economy
‘There was no hope’: Chinese factories struggle to survive (Financial Times)
Jimmy sat on the dusty floor of his Guangdong mill chasing down the money he was still owed. His workers had been paid off, the machinery sold and even the office furniture removed after he shut the factory’s doors in October for the last time. “The decline in orders and the constant lockdowns were all reasons why I wanted to close the factory,” he told the Financial Times. “But most of all, it felt like there was no hope. There was no sign of a rebound.”
China Producer Prices Turn Negative in Warning Sign for Global Economy (Wall Street Journal)
Many economists expect a recession in the U.S. within the next 12 months. Europe is already on the brink of a downturn as Russia strangles the region’s gas supplies in retaliation for Western sanctions slapped on it following its invasion of Ukraine.
The drop in producer-price inflation in China comes alongside a monthslong slide in shipping rates, which together should offer a degree of relief on goods-price inflation for consumers in the U.S. and Europe.
China Downgrades Priority of Economy for Future Legislation (Bloomberg)
China appears to be playing down the importance of development and reform and opening up of the economy for future legislation, adding to concerns that the government is increasingly prioritizing security and ideology over growth.
A draft amendment to the Legislation Law revamped a list of principles for laws, removing the statement in the opening section that lawmaking should revolve around economic development and adhere to reform and opening up.
Instead, the proposed law says that lawmaking should “adhere to the leadership of the Chinese Communist Party, adhere to the guidance of Marxism-Leninism, Mao Zedong Thought, Deng Xiaoping Theory, the Theory of Three Represents, the Theory of Scientific Development, and Xi Jinping Thought on Socialism with Chinese Characteristics for a New Era, to develop a system of socialist rule of law with Chinese characteristics.”
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