Chinese health officials have allowed 4mn Shanghai residents in the financial hub to leave their homes after weeks of confinement, as the country’s rigorous lockdowns weigh on its growth prospects.
Wu Ganyu from the Shanghai Municipal Health Commission said a total of more than 12mn residents would now be allowed out of their homes following a similar relaxation last week, with 7.9mn free to roam their neighbourhoods and a further 4.5mn confined to their housing complexes.
China’s strict lockdowns to combat the highly infectious Omicron coronavirus variant, which led to food shortages and public anger, have dented the country’s economic prospects.
Banks including Barclays, UBS, Standard Chartered and Bank of America have all downgraded their full-year growth forecasts for China in recent days in light of its rigorous zero-Covid policy. The IMF also cut its forecast from 4.8 per cent to 4.4 per cent.
The slight easing in lockdown measures was announced on the same day the country kept its loan prime rate unchanged, which acts as a benchmark for lending, despite analysts’ expectations that authorities would seek to stimulate the economy.
China’s biggest banks maintained their benchmark one-year loan prime rate at 3.7 per cent and its five-year LPR — the reference rate for mortgages — at 4.6 per cent, the People’s Bank of China said on Wednesday. Most economists polled by Reuters expected rates to be cut.
In a bid to stimulate China’s economy, the PBoC this week unveiled 23 measures to support local government infrastructure projects and the struggling property sector, as well as provide financial services to industries buffeted by the pandemic. Last week, the central bank reduced the amount of reserves that banks must maintain increasing expectations for a cut in the LPR.
“All told, the impression we get from all the PBoC’s recent announcements is that policy is being eased but not dramatically,” said Julian Evans-Pritchard, senior China economist at Capital Economics.
“We still expect the central bank to nudge down rates a bit further given that economic headwinds are likely to remain considerable — we anticipate 20bps of cuts to the one-year LPR during the rest of this year.”
China reported a total of 17,166 asymptomatic cases on Wednesday, at least 16,407 of them in Shanghai. It also reported 2,761 symptomatic cases, which it classifies separately, with 2,495 of them in Shanghai.
The tentative easing in Shanghai comes ahead of a relaxation of coronavirus measures in Hong Kong, which will allow residents to dine in restaurants again until 10pm and permit sports fields, beauty parlours, cinemas and religious premises to reopen on Thursday.
The city’s Omicron outbreak has eased after the death rate skyrocketed to the highest in the world last month.
Despite the relaxation, Hong Kong will maintain its strict government quarantine, which businesses argue is strangling the city’s economy, and force residents to wear masks outdoors even when exercising. Beaches also remain closed but the government will allow Disneyland to reopen.
