Canadian Manufacturing

China’s COVID-19 regulations incite worry over global economic impact

by Associated Press   

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Weakness in consumer or factory demand can hurt global producers of oil and other raw materials, computer chips and other industrial components, food and consumer goods.

More than 253,000 coronavirus cases have been found in China in the past three weeks and the daily average is rising, the government said on Nov. 22, adding to pressure on officials who are trying to reduce economic damage by easing controls that confine millions of people to their homes.

The ruling Communist Party promised earlier this month to reduce disruptions from its “zero- COVID” strategy by making controls more flexible. But the latest wave of outbreaks is challenging that, prompting major cities including Beijing to close off populous districts, shut stores and offices and ordered factories to isolate their workforces from outside contact.

That has fueled fears a downturn in Chinese business activity might hurt already weak global trade.

The past week’s average of 22,200 daily cases is double the previous week’s rate, the official China News Service reported, citing the National Bureau of Disease Prevention and Control.

“Some provinces are facing the most severe and complex situation in the past three years,” a bureau spokesman, Hu Xiang, said at a news conference, according to CNS.

China’s infection numbers are lower than those of the United States and other major countries. But the ruling party is sticking to “zero COVID,” which calls for isolating every case, while other governments are relaxing travel and other controls and trying to live with the virus.

On Nov. 22, the government reported 28,127 cases found over the past 24 hours, including 25,902 with no symptoms. Almost one-third, or 9,022, were in Guangdong province, the heartland of export-oriented manufacturing adjacent to Hong Kong.

Global stock markets fell on Nov. 21 as anxiety about China’s controls added to unease about a Federal Reserve official’s comment last week that already elevated U.S. interest rates might have to rise further than expected to cool surging inflation. Shares were mixed on Nov. 22.

Investors are “worried about falling demand as a result of a less mobile Chinese economy amid fears there will be more COVID-related lockdowns,” said Fawad Razaqzada of StoneX in a report.

China is the world’s biggest trader and the top market for its Asian neighbors. Weakness in consumer or factory demand can hurt global producers of oil and other raw materials, computer chips and other industrial components, food and consumer goods. Restrictions that hamper activity at Chinese ports can disrupt global trade.

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