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BEIJING — Lockdowns to stop a growing number of Covid-19 outbreaks have snarled logistics and increased unemployment across China, prompting the country’s leaders this week to order a wide range of measures to prevent the economy from slowing further.
Many companies will be allowed to stop paying unemployment insurance to the government provided they avoid mass layoffs. Electricity and internet charges will be cut for businesses. Young people now graduating from college will be subsidized to start their own businesses since few jobs are available.
Truck drivers will be given many more permits to bypass Covid-19 roadblocks. And migrant workers will be given government allowances if they cannot find jobs.
“Now we need to place greater importance on stabilizing employment,” Premier Li Keqiang said in a statement issued late Wednesday following a cabinet meeting. “The new round of Covid flare-ups has hit employment quite hard.”
Xi Jinping, China’s leader, convened a separate meeting of top Communist Party officials on Tuesday to plan for accelerated investments in infrastructure. These investments have been a mainstay of past efforts in China to fight economic slowdowns, but they are sometimes slow to start and have already saddled many local governments with heavy debts.
Some cities are trying to move more aggressively and quickly to restart the economy. Two very large, affluent ports, Shenzhen and Ningbo, began on Thursday to give their residents a range of shopping and dining gift certificates with a total value of $122 million.
“I think what you see in Ningbo and Shenzhen will be replicated nationally,” said Xu Sitao, the chief economist in the Beijing office of Deloitte, later adding that, “The best policy is not to build another subway, it’s to focus on consumer spending.”
The city of Beijing disclosed late Thursday afternoon that it had found 56 cases of the coronavirus in the preceding 24 hours, up from 46 reported a day earlier. The city has mobilized 139,000 medical workers and support staff in a massive effort to test almost all of its 22 million residents every other day for five days this week.
Credit…Jade Gao/Agence France-Presse — Getty Images
Beijing also announced on Thursday that its school system would be closed on Friday and that students would start a day early the five-day May Day national holiday. City officials said they would decide in the coming days whether classes would resume as scheduled next Thursday, after the holiday.
China’s broader economic troubles can be seen in the recent struggles of Gao Yang, the general manager of an industrial electrical equipment manufacturer based in Tangshan, a steelmaking hub near Beijing.
The city has been under intermittent lockdowns for more than a month. The local government has allowed some companies, including Mr. Gao’s, to resume production if the workers eat, sleep and live at the factories without leaving. But his factory still cannot restart operations because trucks cannot bring raw materials into the city.
“Many parts and accessories from other regions cannot come in,” he said. “So even if we resume work, we are not able to produce.”
Some businesses, particularly in the auto industry, are beginning to reopen, although often at very low levels of production. Volkswagen, the market leader in China’s auto industry, began gradually reopening its large assembly plant in the northeastern Jilin Province last week after a five-week shutdown triggered by a lengthy lockdown there. This week, Volkswagen began gradually reopening its even larger factory complex on Shanghai’s outskirts.
Other manufacturers, including SAIC Motor and Tesla in Shanghai, have also restarted some production. But automakers have refrained from predicting when they might reach full production, much less when they might be able to start running the overtime they need to catch up on the output they have lost this spring.
After falling sharply on Monday and a little more on Tuesday, share prices in China rebounded strongly on Wednesday and edged up a little more on Thursday.
China has also allowed the value of its currency, the renminbi, to slide steadily through the week. That makes China’s exports even more competitive in foreign markets and could further widen China’s trade surplus.
Ever-rising exports, coupled with weak demand for imports, have been a crucial motor for the Chinese economy during the past two years. But they have also fed rising trade tensions particularly with Europe, which has seen its nearly balanced trade with China turn into a large deficit that has hurt economic growth and employment there.
Credit…Reuters
China’s ports have kept running through the current lockdowns, and many port workers have been required since last year to live full time at the docks for months at a time to avoid infections. But Chinese factories are struggling to find trucks to deliver goods to the docks.
Container freight rates out of Chinese ports have actually declined after setting records early this year. Ships previously dedicated to carrying goods straight to the United States from China are now making more stops elsewhere in Asia to pick up goods as well.
“When the ships leave China and come to the rest of Asia, there’s more capacity,” said Sanjay Bhatia, the chief executive of Freightwalla, an online freight forwarder based in Mumbai.
China’s logistical challenges are still increasing. Air and rail travel are increasingly paralyzed by the lockdowns, with a knock-on effect on hotels, restaurants and other service sector businesses.
The immense Baiyun International Airport in Guangzhou, the hub of southern China, canceled 92 percent of its flights on Thursday after what the airport described as an abnormal Covid test reading in a single employee.
Baiyun airport is China’s largest by passenger volume and second-largest by cargo, after Shanghai’s Pudong International Airport. Beijing, Shanghai and Chengdu all have more total air travelers than Guangzhou but each of those cities divides its air travel between two large airports apiece, while Baiyun airport handles all of Guangzhou’s aviation.
Train traffic has also plummeted as cities and provinces discourage visitors from elsewhere in China. Zhou Min, deputy director of the emergency response division at the Transportation Ministry, said at a news conference on Thursday that passenger traffic on trains over the coming May Day national holiday weekend would be down 62 percent from already depressed levels last year.
Big banks and international institutions have responded by lowering their forecasts in recent days for the Chinese economy’s growth this year. The International Monetary Fund last week lowered its forecast for China’s growth to 4.4 percent, from 4.8 percent previously.
The government’s target is still about 5.5 percent.
Li You contributed research.
