Chengdu extends lockdown as Covid persists

The Chinese megacity of Chengdu extended a weeklong lockdown in most downtown areas after Covid-19 cases increased, underscoring the government's commitment to eradicating the virus even as the economic and social costs climb.  

Home to 21 million people and the capital of Sichuan province, Chengdu is the biggest city to shut since Shanghai's bruising 2-month lockdown earlier this year. It reported 116 local cases for Wednesday (Sep 7), compared to 121 Tuesday. Authorities said mass testing will continue, and pledged to eliminate community spread of the virus within a week.  

The decision to prolong the lockdown shows that even as the Covid Zero approach becomes more costly for China's economy, the country remains committed to the policy espoused by President Xi Jinping, who has staked his power on protecting people from the level of virus fatalities seen in the US, which has recorded 1 million virus deaths compared with the 5,200 officially reported by China.

However, the costs of sticking to that strategy in the face of more contagious variants are becoming increasingly clear, as growth forecasts are slashed, and factory and retail activity slumps. China recorded 1,334 Covid cases for Wednesday, marking a month of more than 1,000 infections a day. While small compared with case numbers in other parts of the world now living with Covid, it is significant for a system that is still hunting down every infection and trying to eliminate the pathogen. 

Hopes for recovery in the tourism sector, already hit by snap lockdowns in top destinations such as Hainan and Xinjiang, were further dashed when the health authority urged the public to avoid travelling for upcoming Mid-Autumn and National Day holidays.

Travellers will need to provide a negative Covid test result within 48 hours before being able to board flights or trains, and will need to take another test on arrival at their destinations, said Wu Liangyou, a National Health Commission official, at a briefing on Thursday.

More infectious virus strains are forcing China to lock down more frequently, as officials continue with a policy of wiping out Covid cases. The country has shut down more large and economically important cities in 2022 than at any time during the pandemic, with Shanghai's prolonged lockdown providing a cautionary tale for other cities on waiting too long to act forcefully.

Chengdu locked down as China's ruling Communist Party prepares for a twice-a-decade leadership summit, slated to take place in October, where Xi is expected to break precedent by securing a third term in office. His opening address at the event will be scrutinised for signals on whether China will shift from trying to eliminate Covid, to living with it like the rest of the world.

Beijing, where the summit will take place, is on high alert against flare-ups, and is banning travellers coming from places which have reported Covid cases in the past 7 days. Small clusters have emerged at a university and a high school, and the capital reported 10 new cases as at 3 pm on Thursday. Mass testing is underway at the schools, and some dormitories are being locked down. 

China's CSI 300 Index eked out a gain of as much as 0.3 per cent, but underperformed the broader region, with the MSCI Asia Pacific Index extending gains to 1 per cent. Reopening-related stocks were mixed. Consumer names such as Anta Sports Products and Li Ning fell, while airline shares and tourism service providers Trip.com Group and UTour Group posted gains.

Concerns over the impact of the Chengdu lockdowns helped to propel a sharp sell-off in the oil market. West Texas Intermediate tumbled almost to settle below US$82 a barrel on Wednesday, the lowest close since January, as fears over slowing demand in China added to nervousness over the stronger US dollar and bearish technical signals.

Chengdu residents in locked-down areas need to remain at home and get PCR tests daily. Those living outside so-called high and medium-risk regions are allowed to go out every other day for 2 hours for groceries and medical needs, the city's government said in a statement late on Wednesday. People in some suburban districts which have seen no cases in recent days will be able to resume normal activities, though restrictions remain on gatherings.

Schools will remain shut with classes conducted online, while businesses other than those related to essential services - such as grocery stores and hospitals - will also stay closed.

The Covid measures add to hardships that residents in Chengdu, home to some manufacturing and a famed panda sanctuary, and Sichuan province have endured this summer. 

The province saw record heatwaves that led to droughts and forest fires, with the government introducing rolling power cuts to conserve electricity. A magnitude 6.8 earthquake also struck western Sichuan on Monday, with tremors felt in Chengdu. Some residents complained on social media that when they went to evacuate, the fire exits in their buildings had been sealed due to the lockdown. Bloomberg

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