Southern Hub Guangzhou is China's New Covid Hot Spot

New coronavirus cases have flared in China’s Guangzhou and other cities, health authorities revealed on Tuesday.

The total number of new local infections shot up to 7,475 on November 7 from 5,496 the day before, official data showed, with the southern manufacturing hub accounting for close to a third of new cases.

The increase was modest by global standards but a lot for China, where outbreaks are quickly tackled when they surface, particularly in economically significant cities.

This has raised speculation on whether Guangzhou may face a Shanghai-style lockdown.

The sharp rebound will test China’s ability to keep its Covid measures surgical and targeted, and challenge the expectation of investors that the world’s second-largest economy could soon reopen its borders or even back off from its zero-tolerance approach.

The yuan weakened against the dollar and Chinese stocks slipped on Tuesday as the rising Covid caseload eroded optimism about China’s reopening its borders, which have been shut to most visitors and tourists since 2020.

Guangzhou, capital of Guangdong province, reported 2,377 new local cases for Monday, up from 1,971 on Sunday. It was a dramatic jump from double-digit increases two weeks ago.

As cases surged, the sprawling southern city, dubbed the “factory floor of the world”, surpassed the northern Inner Mongolia city of Hohhot as China’s current Covid epicentre, in its most serious outbreak ever.

Many of Guangzhou’s districts, including central Haizhu, have imposed varying levels of curbs and lockdowns. But, so far, Guangzhou has resisted a blanket lockdown like the one in Shanghai earlier this year.

Shanghai, currently not facing a Covid resurgence, went into a lockdown in April and May after reporting several thousand new infections daily in the last week of March.

“We have been working from home for the past couple of days,” said Aaron Xu, who runs a company in Guangzhou.

“Only a few compounds have been locked up so far. Mostly we are seeing disruptions in the form of public transit services being suspended and compound security barring couriers and food delivery. And we have to do PCR tests every day.”

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Zhengzhou, Beijing, Chongqing, Houhot all hit

Elsewhere in Guangdong province, the country’s biggest air show kicked off in Zhuhai on Tuesday, with some attendees and delegates suddenly finding themselves blocked from the event due to Covid restrictions amid rising cases in the coastal city.

Zhengzhou, capital of central Henan province and a major production base for Apple supplier Foxconn, reported 733 new local cases for November 7, more than doubling from a day earlier.

In Beijing, authorities detected 64 new local infections, a small uptick relative to Guangzhou and Zhengzhou, but enough to spark a new burst of PCR tests for many of its residents and a lockdown of more buildings and neighbourhoods.

“The lockdown situation has continued to deteriorate quickly across the country over the past week, with our in-house China Covid lockdown index rising to 12.2% of China’s total GDP from 9.5% last Monday,” Nomura wrote in a note on Monday.

“We continue to believe that, while Beijing may fine-tune some of its Covid measures in coming weeks, those fine-tuning measures could be more than offset by local officials’ tightening of the zero-Covid strategy.”

In the southwest metropolis of Chongqing, the city reported 281 new local cases, more than doubling from 120 a day earlier.

Chongqing officials have put new curbs on areas in at least four districts, closing some karaoke lounges, dance halls and entertainment venues, in a situation which a local official described as “complex and severe”.

In the coal-producing region of Inner Mongolia, the city of Hohhot also reported 1,760 new local cases, trending higher from 1,013 a day earlier.