Shanghai allows 4 million out of home as IMF cuts China’s economic growth forecast

BEIJING (AP) – Shanghai allowed an additional 4 million people out of their homes on Wednesday as antivirus controls that shut down China’s biggest city eased, while the International Monetary Fund cut its forecast of Chinese economic growth and warned that the global flow of industrial goods could be disrupted.

A total of nearly 12 million people in the city of 25 million are allowed to go outside after the first round of easing last week, health official Wu Ganyu told a news conference. Wu said the virus was “under effective control” for the first time in some parts of the city.

Under the latest changes, more than 4 million people are included in areas where the status has changed from closed to controlled, Wu said. He said some are not allowed to leave their neighborhoods and large gatherings are prohibited.

Meanwhile, the IMF lowered its forecast for Chinese growth this year to 4.4% from 4.8% due to shutdowns in Shanghai and other industrial hubs. That’s nearly half of last year’s 8.1% growth and below the Communist Party’s 5.5% target.

China’s case numbers in its latest outbreak of infection are relatively low, but the ruling party is applying a “zero-COVID” strategy that has closed major cities to isolate all cases.

As of Wednesday, the government reported 19,927 new cases on the Chinese mainland, of which 2,761 had no symptoms. Shanghai accounted for 95% of the total, or 18,902 cases, of which 2,495 had symptoms.

The Shanghai city health agency said seven people who had COVID-19 died on Tuesday, but said the deaths were caused by cancer, heart disease and other illnesses. All but two were over 60 years old.

Shanghai closed businesses and confined most of its population to their homes from March 28, following a spike in infections. This has led to complaints about lack of access to food and medicine supplies. People in Shanghai who test positive but show no symptoms have been ordered to quarantine centers set up in exhibition halls and other public buildings.

Official data this week showed that economic growth in the first three months of this year fell compared to the last quarter of 2021.

The lockdowns in China “will likely exacerbate supply disruptions elsewhere” and could add to pressure for inflation to rise, the IMF said in a report.

The ruling party has promised tax refunds and other business aid but is avoiding large-scale stimulus spending. Economists say the strategy will take longer to show results and Beijing may need to spend more or cut interest rates.

Chinese leaders have vowed to try to reduce the human and economic cost of disease controls by shifting to a “dynamic cleaning” strategy that isolates neighborhoods and other smaller areas rather than entire cities. However, many areas appear to be enforcing stricter controls after Shanghai officials were criticized for not acting aggressively enough.

Also on Wednesday, the Agriculture Ministry ordered local authorities to avoid any measures that could interfere with spring planting by farmers who feed China’s 1.4 billion people. The order followed warnings that production of wheat and other crops could be halted, which would increase demand for imports and raise already high global prices.

The government reported that 26,760 people who tested positive but showed no symptoms were released on Wednesday from observation. That included 25,411 in Shanghai, where some residents of quarantine centers complained they were unsanitary.

Other industrial and commercial hubs, including Changchun, Jilin and Shenyang in the northeast, the port of Tianjin in the east of Beijing, and Shenzhen and Guangzhou in the south, have closed businesses, imposed travel restrictions or told residents to stay indoors.

Global automakers and other manufacturers reduced or stopped production because suppliers couldn’t deliver.

This week, Volkswagen AG announced that its Changchun plant had resumed production and the automaker was considering when its Shanghai plant would reopen. BMW AG said its factory in Shenyang has reopened.

While some cities were easing controls, the government of Harbin, a city of 5.3 million in the northeast, suspended bus and subway service on Wednesday and barred the public from moving between districts.

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