As China’s Covid-19 infections rise, economic prospects worsen and stock sell-off deepens

Beijing scrambles to contain the worst outbreak China has seen since Wuhan in early 2020, as daily infections surpass 5,000

Lockdowns in coastal cities, including the first imposed on Shenzhen, prompt warning that situation has ‘deteriorated at an alarming pace’, with big economic hit expected

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Shenzhen is in a de facto lockdown, with mass testing underway. Photo: AFP

Published: 11:00pm, 15 Mar 2022Updated: 6:10am, 16 Mar 2022

Despite China reporting upbeat economic data to start the year, a severe wave of coronavirus infections has added fuel to scepticism over the pace and effectiveness of its monetary-loosening plans.

The nation is battling its worst outbreak since what was seen in Wuhan in early 2020, and the National Health Commission reported 5,154 infections on Tuesday, including 1,647 asymptomatic cases.

Infections more than doubled from 2,125 a day earlier and brought the total caseload to more than 15,000 since March 1, across 28 provinces. The northeastern province of Jilin is the epicentre of the latest wave.

Beijing’s scramble to contain the virus in coastal cities, with a strict lockdown imposed for the first time on the southern technology hub of Shenzhen, has lowered market expectations for a quick recovery of consumption and serves as the latest reason for China watchers to doubt the country’s ambitious economic growth target this year.

The weak sentiment, driven by factors such as the Russia-Ukraine war and tensions between Beijing and Washington, has also led to massive capital flight and the biggest drop in years in the benchmark CSI 300 index of large Shanghai- and Shenzhen-listed shares.

“The Covid situation in China has deteriorated at an alarming pace over the past week … China’s economy could be severely hit again,” said Nomura’s chief China economist, Lu Ting.