China’s Covid-19 outbreak hitting services sector, travel, hospitality

Calls from Beijing officials to close containment loopholes are unlikely to see cities easing strict virus control measures.
Calls from Beijing officials to close containment loopholes are unlikely to see cities easing strict virus control measures.PHOTO: REUTERS

BEIJING (REUTERS) - China’s tighter social restrictions to fight its latest Covid-19 outbreak, now in its fourth week and involving more than a dozen cities, are hitting the services sector especially travel and hospitality in the world’s second-largest economy.

China has refrained from full lockdowns of major cities such as those seen during the early days of the Covid-19 outbreak in Hubei province, to avoid paralysing the economy, though some economic pain has been felt.

"The current wave has led to the re-imposition of much tighter social distancing measures, which would significantly hurt the transport, tourism, and other service sectors," Citi analysts wrote in a note on Wednesday (Aug 11). 

"We now expect full recovery of the service sector to be further delayed to the fourth quarter." 

Ms Ding, who operates a 15-room lodge in the western highlands of Sichuan province, said she had expected an occupancy rate of at least 80 per cent on weekdays between late July and early August. 

But with eight local infections detected in Sichuan, the actual occupancy rate has been 20 per cent - 30 per cent, she told Reuters. 

When the summer travel season kicked off in July, she received 300,000 yuan (S$62,900) of bookings that month.  "Now, in August, 100,000 yuan would be a struggle," Ms Ding said.

China reported 83 new locally transmitted cases for Aug 10, the health authority reported on Wednesday, bringing the cumulative number of new infections in the past week to 583.

That was an increase of 85.1 per cent in the total number of local cases from a week earlier.

The rate is almost unchanged from the 87.5 per cent surge seen the previous week that officials say has been mainly driven by the highly transmissible Delta variant.

The Delta variant has been detected in more than a dozen cities since the first cases were found in Nanjing late last month, spurring officials in Beijing to tell local governments to overcome "a laxity of mind" in their containment measures and close loopholes in their virus-fighting efforts.

Domestic flights are still allowed to depart from cities that have reported cases, except for those leaving Nanjing, Yangzhou and Zhangjiajie. But flights and trains entering Beijing from areas where cases had been reported have been cut.

China's overall scheduled air capacity fell 31.9 per cent over the past week, one of its steepest weekly drops during the pandemic, according to aviation data firm OAG.

"We do not expect to see an immediate recovery of that capacity in the coming weeks which will further depress the global recovery," OAG said in a weekly update.

Coinciding with the Nanjing outbreak, and the imposition of mass testing and travel restrictions, domestic flight bookings have sharply declined, said Mr Juan Gomez at Valencia, Spain-based aviation consultancy ForwardKeys. 

China has reported a total of 94,080 infections since the coronavirus was first reported in its central city of Wuhan in late 2019. The number of reported deaths remained at 4,636.