China null-Covid: 100,000 officials attend crisis meeting of government to revive economy

admin May 26, 2022

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China null-Covid: 100,000 officials attend crisis meeting of government to revive economy

The unexpected video teleconferencing of the cabinet was attended by officials across the provincial, city and municipal levels, according to a report in the government-owned Global Times. Senior Chinese officials were also present, including Prime Minister Li Keqiang, who called on the authorities to take action to maintain jobs and reduce unemployment.

Li said that in some respects, the economic impact seen in March and April surpassed that in 2020 during the first outbreak of the coronavirus, according to the Global Times. He pointed to several indicators, including unemployment, lower industrial production and freight transport.

The prime minister has become increasingly vocal about the economic downturn in recent weeks, calling the situation “complex and serious” earlier in May – but Wednesday’s comments may paint the gloomiest picture yet.

Investment banks are cutting their forecasts for China’s economy this year. Earlier this week, UBS lowered its full-year GDP growth forecast to 3%, citing risks from Beijing’s strict zero-Covid policy. China has said it expects growth of around 5.5% this year. The world’s second largest economy reported growth of 8.1% last year, and 2.3% in 2020, the lowest pace in decades.

Covid has hit China's economy harder than expected

33 new financial measures

The teleconference comes after a board meeting in the cabinet on Monday where the authorities unveiled 33 new financial measures, including increasing tax refunds, extending loans to small businesses and providing emergency loans to the hard-hit aviation industry, according to the state-owned Xinhua news agency.

Several of the 33 guidelines also ease Covid curbs – such as lifting restrictions on lorries traveling from low-risk areas.

At Wednesday’s meeting, Li called on government departments to implement the 33 measures by the end of May. The government will send workforces to 12 provinces from Thursday to monitor the roll-out of these guidelines, he added, according to Xinhua.

How China's shutdowns take a toll on global companies

Throughout the pandemic, China has adhered to a strict zero-Covid policy aimed at eradicating all transmission chains through border controls, mandatory quarantines, mass testing and blockades.

But this strategy has been challenged by the highly contagious Omicron variant, which increased across the country earlier this year despite authorities fighting to close districts and provincial borders.

By mid-May, more than 30 cities were completely or partially blocked, affecting up to 220 million people across the country, according to CNN estimates. For industries that range from Big Tech to consumer goods, it destroys both supply and demand.

Although some of these cities have reopened, the effects of this disruption are still being felt, with unemployment rising to its highest level since the first coronavirus outbreak in early 2020.

Many companies have been forced to shut down, including carmakers Tesla and Volkswagen. Airbnb is the latest multinational company to pull out, with the home delivery company announcing last week that it would close its listings in China.

There is no clear end in sight to the crisis, with the authorities still struggling to limit the spread of the virus and top executives insisting on pushing ahead with zero-Covid.

On Monday, the national capital Beijing – which has also seen cases creep up in recent weeks – saw seven districts partially under block, affecting nearly 14 million residents. The city’s two largest districts, Chaoyang and Haidian, were included – forcing the closure of all non-essential businesses including shopping malls, gyms and entertainment venues.

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