Nomura says that the China Covid lockdowns are having less of an effect on the economy for the first time since early October. Analysts at a Japanese bank, on the other hand, said that the road ahead will be hard because China doesn’t seem ready for an increase in infections.
In a report, Nomura’s Chief China Economist Ting Lu and a team said that as of Monday, the negative effects of China’s Covid controls on its economy had dropped to 19.3% of China’s total GDP. This is down from 25.1% a week ago.
Nomura’s model shows that the 25.1% figure from last week was higher than what was seen during the two-month lockdown in Shanghai in the spring. At the beginning of October, the number was much lower, around 4%.
In the last few days, local governments have made it easier for people to take public transportation in cities like Beijing and Zhengzhou without having to show proof of a negative virus test. If someone in Beijing tests positive for Covid-19, they are more and more often quarantined at home instead of being sent to a central facility.
Beijing City said on Tuesday morning that proof of a negative Covid test from within the last two or three days was no longer needed to get into public places like malls. But the initial level of implementation was not the same.
China has shown signs that its strict controls on Covid could be getting less strict over time. The country cut down on quarantine times in the middle of November. Last week, a vice premier tried to make the Omicron variant seem less serious than it really is.
But in the last few weeks, the number of virus infections in the country reached daily records. In recent days, the number of cases has gone down because fewer people are getting tested for the virus.
The Nomura analysts said, “Ending zero Covid is good news and should be good for markets, but we warn that the road to reopening may be slow, painful, and bumpy.”
“Even though China has put a lot of money and effort into the heavy-handed ZCS over the past two years, it doesn’t look like it’s ready for a huge wave of Covid infections, and it may have to pay for putting off adopting a “live with Covid” strategy.”
Covid controls in China are very different between cities and districts. More restaurants in Guangzhou city can serve food to eat again, but most restaurants in Beijing only serve food to go.
Most of the schools in both cities are still online. About 452.5 million people are affected by the lockdown right now, but that number is down from 528.6 million a week ago when it was much higher.
Even though those numbers are bigger than the populations of many countries, they are only about a third of the size of China’s population.
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