20 Million in China Lockdown Casts Shadow Over Lunar New Year

·3 min read

The Chinese government is rushing to control outbreaks in the northern parts of the country implementing strict mass testing and quarantine measures for tens of millions in the country, not seen since the very start of the pandemic.

A third city, Anyang, home to 5.5 million people was announced on lockdown on Tuesday joining Yuyang which was put under quarantine a week ago and Xian now on its third week of full lockdown, bringing the total number of people unable to leave their homes to 20 million. Meanwhile, Tianjin over the weekend announced it would require all of its 14 million residents to get tested for COVID-19 over a 48-hour period. The city sits precariously close to Beijing, which is a half hour by high speed rail and is around two hours from the site of the Winter Games.

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The timing of the outbreaks threatens to drag on both Chinese New Year celebrations and the Beijing Winter Olympic Games. Chinese New Year is celebrated between Jan. 31 until Feb. 4 this year, at which point the Winter Olympics, which has already been subject to international controversy, are set to begin.

Although China’s method of relying on quarantines and lockdowns proved effective at the start of the pandemic, its commitment to that policy is coming at mounting social and economic costs as more contagious variants emerge. Countries like Australia and Singapore that similarly relied on containment have since indicated a pivot to living with the virus but China has resolutely stuck to its zero COVID-19 strategy. The nation’s own vaccines are effective at preventing severe hospitalizations and fatalities but offer weak immunity against new variants and it has yet to approve or produce an mRNA vaccine.

It would be the third year in a row that the virus has interrupted traditional celebrations for the lunar year. Hubei province, where the virus first emerged, went into months-long lockdown just days before the holiday in 2019.

Last year the government urged people to reduce all but the most essential travel and introduced a moderate level of travel restrictions. This led many people to stay put in urban areas instead of returning to their hometowns. However, at the time cities mostly operated unencumbered and the transferred spend to shopping and eating out helped boost businesses revenues. If continued, the partial or full lockdowns seen now would mean the opposite outcome for the season.

Xian, although it falls outside what China terms its Tier One cities, is an important engine for the economy and contributor to retail spending in the west of China. Tianjin, part of the northeastern economic cluster Jing-Jing-Ji, is also an important hub. The sidelining of these two cities is sure to accelerate the slide in retail sales.

China’s retail sales in November grew by just 3.9 percent year over year, according to figures from the National Bureau of Statistics, down from the 4.9 percent increase in October and despite the big purchases that occurs annually on Singles’ Day sales on Nov. 11. China’s year-on-year economic growth is expected to drop below 4 per cent in the fourth quarter of 2021.

In December, China announced its new five-year plan revealing it is targeting 50 trillion renminbi, or $7.85 trillion, in annual retail sales by 2025, of which online retail sales will account for 17 trillion renminbi.

In 2020, retail sales in the country reached 39.2 trillion renminbi, falling short of the 48 trillion renminbi that Beijing set when it released its previous five-year plan in 2016.

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