After three years of trying to keep Covid-19 at bay, China is finally loosening its draconian zero-Covid rules. But instead of celebrating, many people are hunkering down, cutting spending and avoiding public areas as they prepare for more Covid cases.
That means China’s economy, which is already suffering its worst downturn in more than three decades apart from the pandemic’s first year in 2020, is likely to endure further weakness before the benefits of reopening fully kick in next year, economists say.
In Beijing, Covid caseloads are swelling, prompting worried citizens to self-isolate at home and stockpile medications. Shopping malls have cut opening hours as foot traffic has dwindled. Delivery services have been disrupted as infected workers are barred from hitting the road, according to interviews with residents and discussions on social-media platforms.
Similar patterns are appearing in other large cities such as Shanghai and Guangzhou, where many people have begun avoiding gathering in public since authorities suddenly abandoned the government’s zero-Covid approach last week.
Qian Yingqin and her daughter haven’t left their compound in Beijing’s Haidian district since Sunday, when her husband tested positive for Covid. Concerned about her 72-year-old mother, who hasn’t been vaccinated, 40-year-old Ms. Qian urged her not to leave her apartment for at least a month.
“I’ve never seen fewer people on the streets and more people wearing masks outside in the past three years,” said Ms. Qian, who also postponed a planned trip with her daughter to Dali, a tourism hot spot in southwestern China. “It’s simply impossible to fend off the virus anymore.”
After barely budging on its pandemic-containment strategy for much of the past three years, Beijing made a U-turn after protests broke out last month among people frustrated with the government’s tough restrictions on public behavior. Those restrictions included frequent testing for people to gain access to public areas, forced quarantines and lockdowns in areas where cases were detected.
Chinese officials worried that the rules were taking too big a toll on an economy that is also suffering from a property-market slowdown and weakening demand for Chinese exports.
After Beijing issued new rules that essentially phased out zero-Covid, many economists began predicting a faster-than-expected recovery, with resurgent consumer spending and travel helping offset weakness elsewhere in China’s economy.
The problem is that since only a tiny percentage of China’s population has been exposed to Covid-19, the country still has to get through an expected wave of cases—and the economic damage that can cause, including delayed investments and reluctance by consumers to venture into restaurants and other public venues.
Unlike the U.S., where consumers used stimulus payments to pay for home improvements and other spending, China’s government has held back on major steps to bankroll mass consumption.
“As China enters its first winter with Omicron, things could get worse before getting better,” wrote economists from Citigroup in a note to clients last month. Although they kept their 2023 forecast of 5.6% annual growth intact, they cut their growth forecast for the fourth quarter to 3.7% from 4.4% previously.
China added about 3,800 new Covid infections each day over the past week, according to official figures. But healthcare experts say actual figures are likely much higher, because local authorities have scaled back testing capacity.
Other data and anecdotal reports point to a quick rise in Covid infections in recent days, especially in Beijing. Citing data from Beijing authorities, economists at Nomura noted in a recent report that the number of patients received for fever treatment at outpatient departments in Beijing hospitals rose to 22,000 on Dec. 11, some 16 times the amount a week earlier.
“There is a problem with people thinking the pullback of Covid-zero measures is equivalent to the economy reopening, which it is not,” said Leland Miller, chief executive officer of China Beige Book, a research firm that conducts private surveys.
Some recent data on mobility patterns show increases in traffic and subway usage in some cities, though the numbers remain depressed compared with 2021, when China was largely free of Covid cases. Sales of cars and properties also fared better last week than the previous week, giving a glimpse of what China’s economy could look like more broadly as it works through its Covid cases.
But behavior in places where Covid is becoming most prevalent—especially Beijing—suggest a rocky stretch in the near term. Searches for the words “fever” and “rapid antigen test” on Baidu, China’s dominant search engine, saw the highest surges over the past week in Beijing, according to economists from Nomura.
On Tuesday afternoon, Christmas-themed music echoed inside a largely deserted shopping mall in downturn Beijing. Some ground-floor stores were closed.
Zhao Guangqiang, a shopkeeper at a skin-care store in central Beijing, told The Wall Street Journal that, contrary to what he expected, in-store sales have fared worse despite the lifting of Covid restrictions, with single-day sales dipping as much as 80% below normal levels.
“There weren’t many customers to begin with,” said Mr. Zhao, 46 years old. Counting utility and rent costs, the store will be in the red for December, as in other months, he said.
Excited about the removal of Covid curbs, Rachel Zhang booked tickets for a vacation in southern China with her 5-year-old son this week. After she heard infections were spreading quickly, she pushed back her travel dates and locked herself in her apartment until she felt more comfortable about the risks.
She wound up with Covid on Monday anyway. She said she is now contemplating canceling plans to visit her parents in Sichuan province during the Lunar New Year in January.
“We didn’t even dare to dine out or call food delivery after reopening. After all, there is nowhere to escape from Omicron,” said Ms. Zhang.
Sales at InstaShake, a milkshake chain in Shanghai, dropped by about one-third over the past month as Covid cases rose sharply, in part because employees were trapped at home during rolling lockdowns under the government’s old zero-Covid policy, said Li Jianxing, co-founder of the two-year old company.
Yet even after the government rolled back zero-Covid rules, Mr. Li said he is still being cautious. He doesn’t plan to expand beyond the company’s current five outlets during 2023, as the business hasn’t been profitable since opening in 2020.
“There’s no sign of a strong recovery just yet, because people are still afraid of getting the virus,” said Mr. Li, who originally had seven outlets, but closed two during the pandemic. He said his worst nightmare is that authorities might reimpose lockdowns if case numbers keep rising.
Another problem is that businesses will likely face labor shortages as more people fall sick, economists say—a problem that has also bedeviled the U.S.
“Until zero-Covid is completely past us, firms aren’t going to invest, borrow or hire,” said Mr. Miller of China Beige Book.
While Shanghai no longer requires people to scan health codes to enter shopping malls and restaurants, local resident Zhang Yuheng said he has little desire to eat out or travel this winter, in part because he is growing skeptical about official Covid figures.
“It would have been much better had Shanghai opened up this spring,” said Mr. Zhang, whose daughter turned feverish on Tuesday, even though her school has had in-person classes suspended for weeks.
“We all suffered so much in vain,” he said, referring to a monthslong lockdown in the city this spring.
This story has been published from a wire agency feed without modifications to the text