The new Covid challenge

The new Covid challenge

As many Thais return to the office, entertainment venues reopen and wearing face masks is no longer mandatory in outdoor public places, new daily coronavirus cases have begun to climb lately, notably among school students.

Health authorities have downgraded Covid-19 to endemic status but they warn that Thailand is no different from 110 other countries that are now dealing with the highly transmissible BA.4 and BA.5 Omicron sub-variants.

Of course, we all know that there is no "back to normal" in sight, at least for now.

In China, just days after authorities relaxed some of the world's toughest Covid controls, infection surges in different areas have put the government on alert again.

Shanghai on Wednesday reported the highest daily total since late May, fuelling concerns the financial hub may look to ramp up restrictions. Two of the 54 infections were found outside of quarantine, raising concerns that the virus could be quietly spreading through communities.

Overall, China reported 409 new coronavirus cases for July 6. In Beijing, where four cases were found, authorities confirmed they had detected the contagious BA.5.2 sub- variant.

The fresh flare-up in Shanghai comes soon after its 25 million people emerged from a brutal two-month lockdown that took an enormous economic and social toll.

According to Nomura, 11 Chinese cities were restricting local movements as of last Monday, up from five a week earlier. The measures affected regions that account for nearly 15% of China's GDP, up from 10% the week before.

In Macau, a popular shopping mall was ordered to shut down for a week, together with more than a dozen other sites, after several Covid infections were found, as authorities raced to contain the biggest outbreak yet in the gambling hub.

Macau also adheres to Beijing's "zero-Covid" policy which aims to curb all outbreaks, even as most countries are trying to coexist with the virus. The territory has reported more than 1,000 cases since mid-June with more than 14,000 people in mandatory quarantine.

In Hong Kong, while a controversial ban on airline routes that brought infected passengers to the city was suspended from last Thursday, authorities ordered 200 kilogrammes of mangoes imported from Taiwan tossed out after finding traces of coronavirus on the skin of just one. The circuit-breaker system has led to about 100 flight routes being banned, causing chaos for travellers who also have to secure quarantine hotel rooms.

While a resurgence of Omicron variants is not a huge issue in most countries, it remains an obsession in China, particularly for President Xi Jinping who is vying for an unprecedented third term later this year.

"It is better to temporarily impact economic development a bit than it is to let the security of people and their health suffer," Mr Xi said during a recent trip to Wuhan, the city where the virus was first detected more than two years ago.

But high cost of the strategy has taken a toll on China's economy with analysts warning that GDP growth would shrink in the second quarter for the first time since 2020. A quarterly drop in GDP, which has only happened once before, would certainly add pressure to the Xi administration's ambitious target for annual GDP growth of 5.5%, if it sticks with a zero-Covid policy that requires tough restrictions wherever virus cases emerge.

The evidence from various indicators is overwhelming of an ongoing slump in the economy. In the property market, which accounts for 20% of GDP, home sales remained in a deep slump in the second quarter. According to China Real Estate Information Corp, the market hit a bottom in May and stopped getting worse, but is nowhere near showing growth.

Bain & Co estimates luxury sales in China fell 30-50% in the second quarter from a year earlier. The number of domestic flights in the quarter plunged 62% from the same period of 2021.

The impact of zero-Covid curbs on the mainland's manufacturing, supply chains and consumer spending has extended its reach well beyond China's borders. It is now routinely identified as one of the primary factors fuelling worldwide inflation and heightening the risk of a global recession.

For China itself, how to move smoothly and effectively beyond zero-Covid is particularly urgent. At the same time, China and other economic powers need to fashion an international response to counter the zero-Covid challenge. Too much is at stake as the world has entered a new phase of the pandemic.

Nareerat Wiriyapong

Acting Asia Focus Editor

Acting Asia Focus Editor

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