Shanghai spike, subvariant’s spread tests China Covid-19 policy

Nine districts will conduct two rounds of Covid-19 mass testing until July 7. PHOTO: AFP

SHANGHAI (BLOOMBERG) - China’s zero-Covid-19 strategy is being tested anew after a jump in infections across Shanghai raised the spectre of another lockdown, while a highly infectious subvariant started spreading in the country for the first time.

Shanghai reported 24 infections for Tuesday, the most in three weeks, with health officials announcing separately on Wednesday that two additional cases were found outside quarantine.

While a small number, the detection of infected people outside isolation and across several city districts raises concerns that the virus could already be spreading widely. 

That’s prompted a ramp up of mass testing, with nine districts and parts of three other districts – out of the financial hub’s total of 16 – conducting two PCR tests over three days to stamp out transmission.

Concerns about a setback to the city’s reopening helped push China’s CSI 300 Index as much as 1.4 per cent lower, the biggest drop in a week.

Meanwhile, the western city of Xi’an reported 11 cases and ordered entertainment venues to close and restaurants to suspend dine-in services for a week, while schools will start their summer vacation early, following the detection of the highly infectious BA.5 subvariant.

The fresh outbreaks and the local spread of a highly infectious Omicron variant show the challenges authorities face in stamping out coronavirus, and signals economic pain may persist.

While authorities are yet to roll out strict lockdowns in major parts of the country, President Xi Jinping last week reaffirmed the country would stick to zero-Covid and said China would rather endure some temporary impact on economic development than let the virus hurt people’s safety and health. 

The zero-tolerance approach leaves the country isolated in a world that’s largely moved to existing with the virus, and keeps businesses and residents living with the constant threat of getting stuck in a cycle of disruptive shutdowns and reopenings.

Shanghai, a city of 25 million people, has just emerged from a two-month lockdown that took an enormous economic and social toll, with the swift rebound in cases following an easing of curbs. 

The city is postponing the reopening of KTV, or karaoke bars, after one violated a government order and seeded the current outbreak, Mr Jin Lei, an official from the city’s culture and tourism administration, said in a briefing on Wednesday.

The government is investigating the venue in Putuo District that illegally operated.

The rising number of cases has also sparked renewed caution in the business community.

Some banks and fund houses have asked some employees to work from home and require a negative test result that’s no more than 48 hours old in order to return to the office, according to people familiar with the matter.

Some companies have also barred clients from visiting their offices, said the people, who asked not to be identified because the information is private.

Shanghai Tower, the city’s tallest skyscraper and home to international firms including JPMorgan Chase & Co and Fitch Ratings Inc, asked their tenants to ensure employees comply with the city’s emergency testing through Friday, according to a notice seen by Bloomberg News.  

Infections are also spreading through provinces across the Yangtze River Delta region, home to manufacturers of chips and medicines to solar panels, and which accounts for a quarter of China’s economic output.

The eastern province of Anhui reported 222 cases for Tuesday, most of them coming from the two small counties already under lockdown.  

Beijing reported six infections, while the nearby city of Tianjin, which boasts Airbus SE’s plane assembly line, also saw a fresh flareup.

Nationwide, a total of 353 infections were reported from at least 11 provinces for Tuesday.  

Elsewhere, gambling hub Macau shut one casino due to a cluster, while Hong Kong reported more than 2,000 cases on Tuesday. 

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