Blockade of Shanghai is increasingly expensive for China

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View of an empty street in Shanghai on April 12th.

After more than two weeks of strict confinement in Shanghai, PCR tests performed every few days are the only permitted exit. Opportunity to notice the extent of change: The streets of the city center, which are usually crowded with consumers competing for selfies in front of trendy cafes, respect the distance of 2 meters and are occupied only by residents in a row. In the 10 minutes outside, I sometimes see a truck passing by. Supplying the townspeople is a logistic headache. Most factories have stopped trying to produce anything: they can no longer procure materials and spare parts and deliver their products.

Answer to your question: In Shanghai, a thorough containment of Covid-19: “What is China ready to accept: increased economic benefits or a certain number of deaths?» »»

The containment of China’s economic and financial capital is a blow to the country as a whole. Nio, an electric car maker based in Hefei, Anhui, had to stop production in the second week of April due to a shortage of parts. “Shanghai is a very important industrial center for both finished products, but even more important for high-tech components, the automotive industry, electricity or new materials. Learn about Dan Wang, Chief Economist at Hang Seng Bank, Hong Kong Bank. But it is also an important center for high-level services: legal advice, intellectual property and finances, of course. »»

IPOs are not possible because you need to get stamps with private management. “But that’s generally a problem for financial markets. Traders who work from home are less productive. Therefore, they focus on big deals and ignore small ones. As a result, liquidity. Will be very low and the cost of borrowing will be high. »» In response, the Central Bank of China announced on Friday, April 15th, a reduction in the reserve requirement requirement for banks.

Most sectors are down

The Shanghai example urged the rest of the country to double its resilience in the face of the virus: more than a quarter of the population, 373 million, moved from travel difficulties. It was subject to restrictions until it was completely banned. According to Nomura Bank’s analysis released on April 11. On the same day, Canton announced the suspension of classes and the ban on leaving the city for 27 Covids. Results: In early April, rail traffic, the main means of transportation between major cities in China, dropped to 30% of 2019 levels with 3,000 trains per day. Economic institutions have already lowered their growth forecasts for 2022. Gross domestic product (GDP) in the first quarter increased by 0.6% thanks to this year’s dynamic start, according to a survey by the Reuters Agency’s Economist Commission. However, activity has fallen since March. Growth is expected to reach 5% in 2022, below the government’s announced target of 5.5%, according to economists surveyed by Reuters.

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