Omicron threatens China's economy

Image by MICHOFF"Ayis" are hard to come by in Shanghai. The services of the domestic helpers, whose Chinese name literally stands for "auntie," are in such demand that their hourly wages at temporary employment agencies in the metropolis of 25 million inhabitants rose by a third last year.

Rental prices are also climbing to heights in inner-city locations that are otherwise only reached in the best areas of London and New York. 90-square-meter apartments for 4,000 euros a month are going away without a single viewing, brokers report: "Those who can afford it in China are moving to Shanghai."

The Omicron variant of the coronavirus has made the city really attractive to Chinese. Ever since the threat of mass spread of the easily transmitted viral variant in the vast country became undeniable, lockdowns and mass testing have threatened to massively affect the freedom and well-being of citizens in China's megacities. Shanghai, traditionally China's most liberal city anyway, has so far responded to isolated outbreaks comparatively mildly by Chinese standards, only sending residents of individual apartment complexes into quarantine when one of the often hundreds of neighbors has been classified as a suspected Corona case. On Thursday night, that was the case at a bubble tea store on Yuyuan Street after authorities reported five new cases.

Two years after the outbreak of the coronavirus in Wuhan, it is considered a locational advantage in China if there is a somewhat lower risk of being roused from sleep at night by party aides in protective suits and then locked up for weeks in centralized hotel quarantine: This makes the global economy fear for the development of the country, which is no longer just a workbench, but has long been the largest market for German companies in particular. After Xi'an, with its 13 million inhabitants, the city of Tianjin, with its 14 million inhabitants and not far from Beijing, is now also under quarantine, after 40 cases of infection were registered there by Wednesday.

European aircraft manufacturer Airbus has set up shop in the port city, as have Siemens and German automotive suppliers Schaeffler and Mahle. Japanese carmaker Toyota suspended operations at its plants Monday because parts stopped coming from its suppliers - whose workers were lining up for government-ordered mass testing.

Volkswagen, whose sales in China, its most important market, are already falling rapidly due to a shortage of semiconductors, shut down two plants in Tianjin. A visitor to the city, meanwhile, has introduced the omicron variant to the northeastern port city of Dalian, which has a population of seven million and, like Tianjin, is one of the world's 20 largest container transshipment hubs. Freighters from all parts of the globe are diverting to Shanghai, causing traffic jams and days-long delays in the transport of goods.

No flights from America to China

The Chinese economy grew by just 3.6 percent in the fourth quarter of last year, according to estimates by bank economists; Beijing's statistics office announced the official figure on Monday. Omicron, against which Chinese vaccines have little effect, could weaken the economy much more, Goldman Sachs, for example, believes, and on Wednesday cut its forecast for China's growth for the year by 0.5 points to 4.3 percent - though bank economist Hui Shan has already factored into that scenario looser monetary policy from China's central bank and billions in stimulus aid from the government.

Although the number of omicron cases is tiny compared to, say, the United States, a nationwide lockdown in China no longer seems impossible. The fact that the Winter Olympics begin in Beijing on February 4 only increases the pressure on the government to prove to the world the superiority of its own zero-Covid strategy.

Beijing has shown how unimpressed it is by criticism of its draconian measures by canceling 70 flights from the United States to China. Washington has condemned the fact that, for the first time since the early 1980s, there is virtually no scheduled flight from the United States to the People's Republic. However, to travel to the capital Beijing is difficult even from Shanghai. That wears a "star" since Thursday night - and is considered a city with risk.



Image by MICHOFF

 


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