Concerns Over Public Sentiment Shift in China... Beijing's COVID-19 Spread Faces Critical Week

Restricted control zones are a new form of lockdown measure applied from Shanghai's failure case
Beijing expands nucleic acid testing to 11 areas... lockdown expansion inevitable if additional infections occur

[Asia Economy Beijing=Special Correspondent Jo Young-shin] The Beijing municipal government in China has introduced a new form of quarantine guideline called the ‘Management Control Zone.’ The State Council released an opinion titled ‘Sustained Promotion of Consumption Recovery.’ The People's Bank of China, the central bank, abruptly lowered the foreign exchange reserve requirement ratio for commercial banks the previous night. Analysts interpret this as the Chinese authorities rushing to win public favor, judging that the resurgence of COVID-19 is a negative factor for President Xi Jinping’s third term.

On the 26th, the Beijing municipal government announced that out of 3,691,200 residents of Chaoyang District who underwent COVID-19 nucleic acid (PCR) testing, 526,457 tested negative. The test results for the remaining individuals are expected to be released by the morning of the same day.

The municipal government explained that it had set up a total of 1,301 nucleic acid testing sites in Chaoyang District the previous day and completed testing for residents and visitors within a single day. Subsequently, the authorities designated areas within Chaoyang District with concerns of infection spread as temporary Management Control Zones. Residents in these zones are prohibited from leaving the designated areas.

Operations of restaurants, cinemas, libraries, and other facilities within these zones have been temporarily suspended. Although this is a new form of lockdown measure, supermarkets, hospitals, and other places essential for survival are allowed to operate normally. This approach is interpreted as an application of the Shanghai failure case to prevent public unrest.

To minimize the economic shock caused by the resurgence of COVID-19, even the State Council has taken action. The State Council stated that domestic demand is the core driver and key link of economic growth, and that expanding consumption, stabilizing supply, and prices will be the top policy priorities. It also emphasized that fiscal and monetary policies such as tax reductions and refunds, lowering various fees, and employment stabilization will be pursued more actively.

Immediately after the State Council’s announcement, the People's Bank of China intervened in the foreign exchange market. As the yuan’s exchange rate against the dollar plummeted following the news of the Beijing lockdown, the foreign exchange reserve requirement ratio was sharply lowered by 1 percentage point from 9% to 8%. This freed up dollars that commercial banks were required to hold. The People's Bank of China had raised the foreign exchange reserve requirement ratio by 2 percentage points from 7% to 9% last December.

Zhong Zhengcheng, chief analyst at Ping An Securities, explained, "Multiple factors such as concerns over downward economic pressure, the Russia-Ukraine war, decreased domestic demand due to the COVID-19 resurgence, and a slowdown in export growth are acting in combination, causing the yuan exchange rate to show an appreciation tendency."

Chinese state media are supporting the authorities, stating that they are adhering to the four basic epidemic prevention principles of early detection, early reporting, early confirmation, and early quarantine, but this week is expected to be a critical turning point for China’s politics and economy.

The Beijing municipal government plans to conduct three rounds of nucleic acid testing by the 30th in 11 areas including Dongcheng District, Xicheng District, Haidian District, and Fengtai District, in addition to Chaoyang District. This is interpreted as an attempt to test the entire Beijing area and trace infection routes, but considering the highly transmissible nature of the Omicron variant, it is expected to be challenging.

Some in Beijing are voicing concerns that if additional infections emerge this week, the lockdown areas could be expanded.

Wang Guangpa, an infectious disease specialist in Beijing, expressed concern, saying, "The transmission routes of new cases are unclear," and "Beijing could face a severe outbreak situation."

Accordingly, the ‘recommendation’ for movement restrictions during the Labor Day holiday period (April 30 to May 4) in Beijing is likely to be changed to a ‘ban’ on movement.

Wei Sheng, a professor of public health at Huazhong University of Science and Technology, said, "The Omicron variant spreads very quickly and has a high infection rate," adding, "In addition to nucleic acid testing, appropriate control of movement is necessary."

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