BEIJING — Lockdowns to halt a growing number of Covid-19 outbreaks have choked logistics and increased unemployment across China, leading the country’s leaders to order a wide range of measures this week to prevent the economy further slows.
Many companies are allowed to stop paying unemployment insurance to the government, provided they avoid mass layoffs. For companies, electricity and internet costs are reduced. Young people now graduating from university will be subsidized to start their own business as there are few jobs available.
Truck drivers are getting many more permits to bypass Covid-19 roadblocks. And migrant workers get government benefits if they can’t find a job.
“Now we must give more importance to stabilizing employment,” Prime Minister Li Keqiang said in a statement released late Wednesday after a cabinet meeting. “The new round of Covid flare-ups has hit employment quite a bit.”
China’s leader Xi Jinping convened a separate meeting of top Communist Party officials on Tuesday to plan for accelerated investment in infrastructure. These investments have been a mainstay of previous efforts in China to combat economic slowdowns, but they are sometimes slow to get started and have already left many local governments in debt.
Some cities are trying to act more aggressively and faster to restart the economy. Two very large, prosperous ports, Shenzhen and Ningbo, began giving their residents a range of shopping and dining gift cards worth a total of $122 million.
“I think what you see in Ningbo and Shenzhen will be replicated nationally,” said Xu Sitao, the chief economist in Deloitte’s Beijing office, adding later: “The best policy is not to take another subway. It’s to focus on consumer spending.”
The city of Beijing announced late on Thursday that it had found 56 cases of the coronavirus in the previous 24 hours, up from 46 reported the day before. The city has mobilized 139,000 medical and support personnel this week in an effort to test nearly all 22 million residents every other day for five days.
Beijing also announced Thursday that the school system would be closed on Friday and that students would start the day before the five-day national holiday on May 1. City officials said they would decide in the coming days whether classes would resume next Thursday, after the holidays.
China’s wider economic problems can be seen in the recent struggles of Gao Yang, the general manager of an industrial electrical equipment manufacturer in Tangshan, a steel production center near Beijing.
The city has been intermittently locked down for more than a month. The local government has allowed some companies, including Mr Gao’s, to resume production if the workers in the factories eat, sleep and live without leaving. But his factory still can’t restart operations because trucks can’t bring raw materials to the city.
“A lot of parts and accessories from other regions can’t come in,” he said. “So even if we resume work, we won’t be able to produce.”
Some businesses, especially in the auto industry, are starting to reopen, although often at very low production levels. Volkswagen, the leader in China’s auto industry, began to gradually reopen its large assembly plant in northeastern Jilin province last week after a five-week shutdown caused by a prolonged lockdown there. This week, Volkswagen began gradually reopening its even larger factory complex on the outskirts of Shanghai.
Other manufacturers, including SAIC Motor and Tesla in Shanghai, have also resumed some production. But automakers have refrained from predicting when they might hit full production, let alone when they might be able to work the overtime they need to make up for the output they lost this spring.
After falling sharply on Monday and slightly more on Tuesday, stock prices in China recovered strongly on Wednesday and rose slightly further on Thursday.
China has also allowed the value of its currency, the renminbi, to slide steadily through the week. That makes Chinese exports even more competitive in foreign markets and could further increase China’s trade surplus.
Ever-increasing exports, coupled with sluggish import demand, have been a key driver of the Chinese economy over the past two years. But they have also fueled rising trade tensions, particularly with Europe, which has seen its near-balanced trade with China turn into a large deficit that has hurt economic growth and jobs there.
China’s ports have continued to operate due to the current closures, and many dock workers have been forced to live in the docks full-time for months since last year to prevent infections. But Chinese factories are struggling to find trucks to take goods to the port.
In fact, container freight rates from Chinese ports have fallen after setting records early this year. Ships previously destined to carry goods directly from China to the United States are now making more stops elsewhere in Asia to pick up goods.
“As the ships leave China and come to the rest of Asia, there will be more capacity,” said Sanjay Bhatia, the chief executive of Freightwalla, an online freight forwarder based in Mumbai, India.
China’s logistical challenges are still increasing. Air and rail travel is increasingly paralyzed by the lockdowns, with a knock-on effect on hotels, restaurants and other businesses in the service sector.
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 on a single employee.
Baiyun is China’s largest airport by passenger volume and second largest by cargo, after Shanghai’s Pudong International Airport. Beijing, Shanghai and Chengdu all have more air travelers than Guangzhou, but each of those cities splits air traffic between two major airports, while Baiyun handles all of Guangzhou’s aviation.
Rail traffic has also fallen as cities and provinces discourage visitors from elsewhere in China. Zhou Min, deputy director of the emergency department of the Ministry of Transport, said at a news conference on Thursday that passenger traffic on trains over the coming national holiday weekend on May 1 would fall by 62 percent from the already low level of last year. .
Major banks and international institutions have responded by lowering their forecasts for China’s economic growth this year in recent days. The International Monetary Fund lowered its forecast for China’s growth to 4.4 percent last week, from 4.8 percent earlier.
The government’s target is still about 5.5 percent.
Li You research contributed.
