China’s COVID Surge Turns Markets into a 4‑Square‑Feet Shakedown
China logged a brand‑new high of 31,444 local COVID cases on Thursday, smashing the record set back in April when Shanghai’s 25‑million residents had to stay inside for two whole months. The spike has sent investors packing, investors’ hopes for a quick lift of the “zero‑COVID” policy into the gutter, and has left factories — from the world’s largest iPhone plant to staple manufacturing units — wobbly as a toddler on a treadmill.
Why the Numbers Matter
- Record‑taut action. Beijing, Shanghai, and other metropolises have been rolling out very localized, often unannounced lockdowns that feel more like a sudden text from an over‑protective parent than a policy measure.
- Investor panic. Nomura’s analysts warned that reopening will be rocky and costly, shuffling its Q4 GDP forecast down to 2.4% from 2.8%, and trimming next‑year growth to 4.0% from 4.3%.
- Factory riffraff. Violence between workers and security at the Foxconn plant in Zhengzhou showed an unprecedented level of dissent that even the most stoic HR manuals would find hard to swallow.
- Policy press‑releases. The cabinet hinted at cutting the reserve‑requirement ratio to keep a liquid cushion in banks—think of it as a secret sauce for future economic food fights.
Zero‑COVID Keeps People—and Commerce—Trapped
The Chinese leadership has stuck to the 12‑step zero‑COVID rule, insisting it’s all about saving lives and preventing the healthcare system from tipping into chaos. Yet the 12‑step approach is also a shackle that’s still restraining its own economy.
In a string of quick orders, city officials have begun dialing back big‑ticket measures like mass‑testing, but they haven’t let go of the freedom‑denying lockdowns that stop millions of folks from stepping out of their apartments. Beijing residents, for instance, got an eye‑popping notice that their housing blocks were forced into a 3‑day lockdown.
“Shanghai‑Style Full Lockdowns” vs. “Partial Lockdowns”
Nomura analysts estimate that more than one‑fifth of China’s GDP lives under a lockdown, a number larger than the British economy. They claim full lockdowns like Shanghai’s are now a thing of the past; instead, “partial lockdowns” will appear more frequently in a growing number of cities as cases rise.
In a big splash, Zhengzhou announced five days of mass testing across eight districts, resurrecting the daily tests that were once a far‑off memory when millions of residents were locked inside their homes.
Final Word: The Tide’s Rising, And the Chill is Set
While the government is scrambling to keep the medical system from drowning, the bottom line is that the economy is taking a mid‑season layback. That’s all the better for investor optimism, because it’s looking more like a cliff‑hanger than a finish line.
