Corona in China: Lockdowns reduce growth

Berlin, Beijing China is increasingly closing down due to the recent corona outbreak. European companies in the People’s Republic are sounding the alarm. The president of the EU Chamber of Commerce in Beijing, Jörg Wuttke, spoke of a “catastrophic situation” on Friday. While the world is opening up and returning to “business as usual,” according to Wuttke, China is once again in a precarious situation.

More than a fifth of China’s total economic output is now affected by business closures, according to Nomura. The Chinese government only announced more targeted measures in the middle of the month, which should contribute to easing the burden on the population and the economy.

But this week, the number of coronavirus infections in China rose to the highest level since the start of the pandemic. Scenes in Beijing and other cities resemble the start of the pandemic in 2020: the streets are empty, with few cars or people visible on the streets, restaurants and shops closed.

Analysts are already warning of consequences for the growth of the world’s second largest economy. If the effects on the Chinese economy were to be of a similar magnitude to the second quarter of this year, when the economic capital Shanghai was hermetically sealed, the growth forecast for 2022 would have to be increased, according to Oxford Economics. from the current 3.1 percent to two to two to reduce by 5 percent.

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Analyst house Nomura lowered its forecast for fourth-quarter gross domestic product (GDP) growth year-on-year from 2.8 percent to 2.4 percent. For the whole year, experts expect only 2.8 percent growth. China’s central bank is therefore helping the ailing economy by easing monetary policy. The rate of minimum reserves – a kind of mandatory bank deposit – will fall by 0.25 points, the central bank announced on Friday. The reduction will take effect on December 5.

Corona in China: Draconian measures spark unrest

The increasingly dramatic measures in the third year of the pandemic are causing unrest in China. Citizens have clashed with police and other security personnel across the country in recent days.

Hundreds of police beat workers at Apple supplier Foxconn’s factory in Zhengzhou, eastern China, after they demanded better food supplies and better wages.

More and more reports of people dying as a result of draconian pandemic measures are also causing discontent: CNN, for example, reports on a son who lost his father because he was not admitted to a nearby hospital after a medical emergency. on corona restrictions.

According to media reports, ten people died in an apartment fire in western China’s Xinjiang province as the fire department was unable to reach the scene due to the coronavirus lockdown.

>> Read here: 20,000 workers likely to leave iPhone factory – maker to pay extra to get rid of protesters

Representatives of the European economy in China spoke of great concern on Friday about the newly introduced travel restrictions within the People’s Republic. According to Francis Liekens, representative of the EU Chamber of Commerce in Shanghai, many companies have postponed business trips and are preparing for the upcoming closure of production facilities.

European companies are increasingly worried

The headquarters of European companies are increasingly concerned about the situation. “Bad memories of the Shanghai quarantine are coming back,” Liekens said. Roughly 25 million residents of China’s economic metropolis were not allowed to leave their homes for roughly nine weeks at the beginning of the year.

In northern China’s Shenzhen, where BMW also has a large production plant, employees are once again sleeping in factories. European firms in southern China are working seven days a week to fulfill their orders, fearing an early shutdown.

District in lockdown

China is consistently implementing a zero-Covid policy.

(Photo: Bloomberg)

The disruption in supply chains has not yet fully taken effect due to “soft blockades” in Beijing and many other cities in China, Jens Hildebrandt, a member of the executive board of the German Chamber of Commerce (AHK) in China, told Handelsblatt. However, German firms are already “preparing for serious impacts on production”.

>> Read also: Corona numbers in China are at a record high – German companies fear “serious consequences”

A number of employees are currently unable to get to work due to the tightened measures. “The fact that almost three years after the outbreak of the pandemic there is still no retreat strategy for a zero-Covid policy in sight is increasingly met with misunderstanding in the German economy,” he criticized.

Siemens says: “In close cooperation with our partners, all factories in China are currently continuing production.” Emphasis is placed on the health and safety of employees. “In China, all Siemens entities and employees are working closely together to fight the pandemic and ensure business continuity.”

Constant blockades are extremely stressful for people. There are rumors about the complete closure of large cities, such as in Wuhan in early 2020 or Shanghai in early 2022. People avoid entering buildings for fear of being subsequently called that a case of corona has been discovered there and they have to to the central quarantine. Due to the high number of cases, temporary container and tent areas have been set up across the country to quarantine potentially infected people.

“Many people are thinking about returning to Europe”

“You have this uneasy feeling that you will be next,” said EU Chamber of Commerce President Wuttke. “Many people are thinking about returning to Europe,” explains Erich Kaiserseder of the EU Chamber of Commerce in Shenyang.

According to insiders, 20,000 employees are leaving the iPhone factory

The reason why China is still relying on draconian measures in the third year of the pandemic is, in addition to still poorly equipped hospitals, the very low vaccination coverage of the population. The elderly population in particular is de facto not protected from the consequences of infection.

Official figures show that only 40 percent of people over 80 have had their third vaccination. However, since only Chinese vaccines are used in China, which are less effective than foreign ones, this rate should be much higher, according to experts.

The Chinese government has put the country in a dilemma. The Chinese government cannot now relax the measures “under any circumstances,” said Bernhard Schwartländer, a German health expert who currently works at the German embassy in Beijing. “Vaccination coverage is too low.” A large part of the population is currently not adequately protected.

Beijing is puzzling over why China is not speeding up vaccination campaigns or allowing more effective mRNA vaccines from abroad. The European economy has also been appealing for months to the Chinese government to better protect the population from the infection with more vaccinations. According to Wuttke, China has an opportunity to do something.

More: Read all the current developments of the corona crisis on the news blog

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