China on edge as Shanghai shuts businesses and quarantines close contacts

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Shanghai has imposed a new round of business closures and quarantines of close coronavirus contacts as China reels from unprecedented protests against Xi Jinping’s zero-Covid policy and censorship.

Confusion over the future of pandemic controls in the world’s most populous country deepened after protesters took to the streets in at least 18 cities.

Police and security forces appeared to have stamped out the weekend’s protests as people looked for a signal of policy changes from a meeting of the State Council, China’s cabinet, on Tuesday.

In markets, traders bid up shares on Tuesday on hopes that authorities would alter their response to the pandemic, following a sell-off at the start of the week that led global markets lower.

The CSI 300 index of large and liquid Shanghai- and Shenzhen-listed stocks was up 2.8 per cent, while the Hang Seng China Enterprises index gained 4.8 per cent, with both gauges more than reversing losses from the previous day.

Chinese state media had not reported on the recent protests, instead reiterating the benefits of Beijing’s zero-Covid policy. The People’s Daily, the country’s main state-sponsored newspaper, ran a rallying editorial celebrating the Communist party.

Online censors have also been working overtime, scrubbing out images and videos of the protests. Students at campuses across China held white sheets of paper during the weekend’s demonstrations, a symbol of their inability to express dissatisfaction with the government’s policies.

Chinese television channels limited close-ups of maskless football fans during broadcasts of the World Cup in Qatar. That followed an online backlash from domestic viewers questioning why China continued to implement lockdowns as the rest of the world dropped restrictions.

State broadcaster CCTV zoomed in on players and officials after a goal was scored instead of close-ups of fans celebrating.

One Beijing-based football fan, who goes by the nickname Menzhu, first spotted that CCTV was cutting broadcasts of fans during the France versus Denmark game on Sunday.

“The broadcast was very strange. There was no replay after the goals. At first, I thought the broadcast technicians made a mistake, but then I realised the live broadcast had avoided images of fans.”

Ahead of the State Council meeting, China remains beset with frustration over the zero-Covid policy, which has restricted movement, required daily monitoring and consigned 1.9mn people to quarantine facilities.

Officials in several cities — including Wuhan, the scene of one of the biggest mass protests on Sunday — appeared to ease some local-level restrictions of movement on Monday.

China’s caseload remains low by almost all international comparisons, yet areas with at least partial lockdowns and travel restrictions have spiralled to hit more than 25 per cent of China’s gross domestic product, according to an analysis by Nomura, the Japanese bank. That exceeds the previous peak of about 21 per cent in April, when Shanghai was locked down.

While officials have resisted announcing citywide lockdowns in response to the record surge in cases, Ting Lu, Nomura’s chief China economist, argued that China’s “de facto lockdowns may be tougher than de jure lockdowns”. This is because local officials believe their performance is determined by avoiding sharp rises in case numbers.

“Although Shanghai-style full lockdowns may be avoided, partial lockdowns in a rising number of cities may be more costly than full lockdowns in just a couple of cities,” he said.

“The rapid increase in public discontent over the lockdowns over the past weekend may further cloud the road to reopening.”

The severity of the economic damage is also reflected in intracity mobility data — a short-term metric of economic momentum — with metro passenger trips in 15 big Chinese cities down 41 per cent on the previous year, dropping from a 24 per cent year-on-year decline a week earlier.

The country of 1.4bn people reported 37,477 new locally transmitted cases of the virus on Tuesday, down slightly from the record 38,808 reported the day before.

The highest concentrations of new cases were in the southwestern city of Chongqing, which reported nearly 9,000 cases, and the southern manufacturing hub of Guangdong province, which notched more than 8,000 new cases. Infections continued to rise in the capital Beijing, which registered more than 4,000 cases.

Additional reporting by William Langley in Hong Kong

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