As Beijing eases lockdown, European firms weigh leaving China

First modification: 05/05/2022 – 16:15

The current situation in China since the arrival of the Omicron variant in the territory has become increasingly delicate. Although in Beijing the context is not yet suffocating for the inhabitants, the measures implemented by the Government are detrimental to the national economy and to private entities, who saw their profit estimate for this year reduced.

This Thursday, May 5, after the Workers’ Day holidays, the capital told the inhabitants to resort to teleworking, although the figures are low and only 50 cases were registered in the last 24 hours.

In addition, the authorities ordered the closure of 60 metro stations, which is equivalent to more than 10% of the transport system; nor to consume food in restaurants and bars, which were reduced to takeout, attend closed places such as gyms and classes were suspended for at least one week.

While the main tourist places, such as the Forbidden City and the Zoo, had to close their indoor exhibition halls and operate with reduced capacity.

On the other hand, in Beijing the conditions of isolation for those who arrive from abroad were relaxed. Now it will be ten days locked up in a hotel and seven at home, a drop compared to the 21 and 7 days, respectively, that were in force.

The justification given by the government spokesman, Xu Hejian, was that the Omicron variant has a shorter incubation period and less severe symptoms. However, as there are few international flights to the Chinese capital, the rule change will have a minimal effect, even if it contains a symbolic value.

The decisions are part of the “zero Covid-19” strategy that aims to leave behind the endemic that forced the implementation of massive tests, total confinements -such as the one suffered in Shanghai- and restrictions on civilians who come from abroad.

These controls have direct influence on the economy. For example, tourist income for the five days of the Workers’ Day holiday had a relapse of 40%, taking the previous year as a reference.

European companies consider leaving China due to rigid restrictions

Through a survey published on Thursday, the European Union Chamber of Commerce in China stated that, due to the complications generated by the anti-Covid-19 measures, many European companies are studying the possibility of moving their investments out of the country.

Lockdowns, reduced mobility and supply chain disruption caused activity in China’s service sectors to fall in April to its second-worst level on record.

A quarter of the firms surveyed said they were considering moving out of the country, being more than twice as undecided as at the beginning of the year. “Our members are weathering the storm now, but if the situation continues they will evaluate alternatives,” warned Jorg Wuttke, president of the Chamber.

In addition, he added that companies understand the moment China is experiencing and the need to prevent the spread of the coronavirus, but they also need time frames for gradual reopening.

While 60% of the 372 respondents detailed that they reduced their revenue forecasts for this 2022 and 92% emphasized the damage caused by the closure of ports, the decrease in road transport and the increase in maritime transport costs.

With EFE, AP and Reuters