China continues its strict zero-tolerance policy of anti-COVID lockdowns as new closures closeted 200 million people in 28 cities as of 24 October, according to The Wall Street Journal.

The measures disrupted food supplies in Xining, a remote northwestern city of 2.5 million.

Zhengzhou, home to electronics assembly powerhouse Foxconn, showed 50 separate hotspots. The virus was spreading rapidly, the company reported, adding that a rumor that 20,000 employees had tested positive was untrue.

Beijing’s Universal Resort theme park was closed after contact tracing showed two people infected had visited there.

On 27 October, China reported only 1,200 active COVID cases, emphasizing the extreme nature of its response to what amounts to a miniscule outbreak among a population of more than 1.4 billion.

In accepting a third term as China’s president, Xi Jinping vowed no letup in the policy, saying it has “protected the people’s health and safety to the greatest extent possible.”

Health officials are urging the local government to build quarantine hospitals to prepare for a winter COVID siege. 

However, the policies are weighing on the economy, as we note in “Most Shanghai Businesses Believe China’s Economy Is Mismanaged” in this issue.

Beijing mandated mass anti-COVID lockdowns last March that froze social movement and business activity for more than 325 million people—almost as many as the entire U.S. population—in 45 metro areas.

A month later, China’s retail sales contracted 11.1 percent and industrial output shrank by 2.9 percent, as we detailed in “Data Shows How Badly China’s Lockdowns Have Hurt Economy” (17 May 2022).

China’s auto plants turned out 41.1 percent fewer passenger cars than a year earlier, the China Passenger Car Association reported. 

Auto sales slumped by 31.6 percent in April, year on year, the state statistics bureau noted. 

In April 2022, new lockdowns across key industrial centers tangled the country’s logistics network, barring food and other goods from traveling between cities. The mandate shut a main terminal in the Port of Shanghai, the world’s busiest ocean shipping locale. (See “Lockdowns Cripple China’s Logistics Chain,” 12 Apr 2022).

TREND FORECAST: Xi’s insistence on drastic lockdowns already has taken points off China’s economic growth this year. Having stocked his inner circle with yes-men as he embarks on a third presidential term, the policy is unlikely to change in the near future.

That policy, coupled with a slowing domestic and global economy, will delay China’s ascendance as the world’s leading economy by at least three years.


China’s official purchasing managers index (PMI) fell into contraction in October, slipping from a September rating of 50.1 to 49.2 last month, due to ongoing anti-COVID lockdowns.

Ratings below 50 indicate economic contraction.

The index has sunk below 50 in six of this year’s 10 months.

PMI sub-indexes rating factory employment, output, new orders, and supplier delivery times all fell into contraction last month compared to September.

The employment sub-index has been negative for 19 consecutive months, Ting Lu, Nomura’s chief China economist, told CNBC.

China’s services sector lost ground in October for the first time since May. The non-manufacturing PMI rated 48.7 for the month.

Sub-indicators for postal services, Internet software, and information technology services climbed above 60 in advance of an expected rise in trade for the Singles Day shopping festival this month.

Sales volumes among hotels and restaurants are still 20 percent below 2019 levels, Goldman Sachs reported.


More than half of the 307 companies surveyed by the American Chamber of Commerce in Shanghai believe the draconian ant-COVID lockdown measures being continued by China’s president Xi Jinping are damaging business conditions.

A fifth of the firms said they are cutting back on new investment because of the policy.

The extreme measures have “upended business performance expectations” and the country should “pivot to a more sensible approach based on a reasonable balance between public health and the economy,” chamber president Eric Zheng said in comments quoted by the Financial Times.

China still typically requires PCR COVID testing for people using public transport or entering theaters or similar public venues.

When lockdowns are imposed, workers are forced to live at their factories in order to continue production.

The rolling, often lengthy lockdowns also make it difficult for foreign business executives to enter the country.

Less than half the companies surveyed expect revenue to grow in 2023, even though three-quarters reported a profitable 2021.

Less than half also expected revenue growth in their Chinese markets next year to equal or exceed that from their companies’ operations elsewhere.

China’s economy has grown 3.9 percent in this year’s third quarter, according to new government data, well below Beijing’s 5.5 percent growth target in 2023, itself the lowest in decades.

This year, for the first time since 1990, China’s economy will do less well than most of its Asian counterparts, the World Bank has forecast.

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