COVID-19 Spreads to 10 Provinces Nationwide in China... 'Triple Whammy'

Power Shortage, Real Estate Slump, Infectious Diseases... Goldman Sachs Forecasts 4.1% Growth in Q4
Chinese State Media: Temporary Phenomenon Due to Large-Scale Movement During National Day

[Asia Economy Beijing=Special Correspondent Jo Young-shin] As COVID-19 cases have emerged in 10 provinces, autonomous regions, and municipalities in China, Chinese epidemic prevention authorities are on high alert.

While sporadic COVID-19 cases had occurred in some provinces, this is the first time this year that confirmed cases have appeared simultaneously in 10 provinces. Analysts suggest that China is facing a triple crisis of power shortages, a real estate market slump, and a resurgence of infectious diseases.

China's state-run Xinhua News Agency reported on the 22nd that seven new confirmed cases were identified in Erenhot City, Inner Mongolia Autonomous Region. The day before, 13 confirmed cases were reported in Ejin Banner, Inner Mongolia. This area, which includes the Chuka Trade Port?a trade route with Mongolia?was temporarily closed immediately after the cases were confirmed. The Chuka Trade Port is a major route for importing Mongolian coal.

Xinhua cited data from the National Health Commission (NHC), reporting that COVID-19 cases were confirmed in a total of 10 provinces including Inner Mongolia, Shanxi Province, Gansu Province, Ningxia Hui Autonomous Region, Hunan Province, Guizhou Province, Hebei Province, Hubei Province, Qinghai Province, and Beijing. As of the 19th, confirmed cases had been reported in seven provinces. Within just one day, three additional provinces reported confirmed cases.

Xinhua added that COVID-19 is spreading mainly along the travel route of a group of tourists who traveled from Shanghai to Xi'an in Shanxi Province, then to Gansu Province and Inner Mongolia.

Photo by Xinhua News Agency Capture

Chinese health authorities have also strengthened control measures. Shanxi Province has closed 22 tourist sites and is conducting nucleic acid testing on residents in those areas. Provinces where confirmed cases have been identified?including Inner Mongolia, Beijing (Fengtai District), Qinghai Province (Haidong City), Gansu Province (Lanzhou City), and Hebei Province (Xingtai City)?have been completely locked down, with nucleic acid testing and epidemiological investigations underway. Given that Chinese health authorities’ control measures typically last from two to four weeks, economic activities in these 10 provinces are expected to be temporarily suspended.

As a result, concerns are emerging that the nationwide resurgence of COVID-19 will negatively impact the Chinese economy, especially the fourth quarter economic growth rate.

In this regard, the British publication The Economist analyzed that due to power shortages caused by coal deficits and a real estate market slump triggered by Evergrande Group, China’s economic growth rate in the third quarter was limited to 4.9% year-on-year, and that the nationwide resurgence of COVID-19 could become China’s third adverse factor. The publication reported that Evergrande Group’s liquidity issues have made homebuyers hesitant to invest, leading to a sharp decline in China’s cement and steel production in September by 13% and 14.8% respectively compared to the same month last year.

The Economist, citing economic experts, predicted that the Chinese economy is likely to slow further in the fourth quarter. Power shortages could drag down industrial production indicators, and the real estate slump is expected to continue for the time being. On top of this, the nationwide resurgence of COVID-19 is expected to negatively affect the fourth quarter economic growth rate.

In fact, Goldman Sachs forecasted China’s fourth quarter economic growth rate at 4.1%, while Morgan Stanley (4.5%), Credit Suisse (4.1%), UBS (4.0%), Moody’s (3.7%), and Nomura Securities (3.0%) all lowered their growth rate estimates. The median forecast for China’s fourth quarter economic growth rate compiled by Bloomberg is 4.1%.

The state-run Global Times reported on the same day that during the National Day holiday period (October 1?7), 515 million people traveled nationwide, and that this resurgence is temporary.

Fang Xinghua, Deputy Director of the Beijing Center for Disease Control and Prevention, explained, "Genetic sequencing of the virus shows that all cases are of the Delta variant and are the same as those reported in Shanxi and Gansu provinces," attributing the spread to the large-scale movement during the National Day holiday.

This content was produced with the assistance of AI translation services.