(Bloomberg) -- China is starting to re-impose Covid-19 restrictions just weeks after major easing in key cities, raising concern the country may once again employ strict lockdowns to control its outbreak.
Beijing reported 51 new local cases for Sunday, after having single digit cases on most days last week. The city’s local government said an outbreak linked to a popular bar is proving more difficult to control than previous clusters, in a weekend that saw mass testing and rising infections both in the capital and Shanghai. A total of 37 cases were reported for Shanghai, with five new cases detected in the community.
Authorities delayed the reopening for most schools in Beijing that was planned for Monday, while most districts in Shanghai suspended dine-in services at restaurants. China reported 143 cases nationwide for Sunday as the number of new infections crept up. Daily cases fell below 100 last month for the first time since early March after strict curbs.
Investors shrugged off the backsliding in reopening. Mainland shares outperformed regional peers on Monday, helped by the improving credit data and Beijing’s diverging monetary path versus the US Federal Reserve. The CSI 300 Index fell 1.3% as of the mid-day lunch break, compared with a 2.3% loss for the MSCI Asia Pacific Index.
Outbreaks have re-emerged just days after the two cities eased social curbs that had been in place for months. The quick rebound in cases once restrictions were lifted shows the difficulties of fully stamping out the more contagious virus variants. Only China is still engaged in the effort of eliminating transmission.
Its zero-tolerance approach leaves the country stuck in a cycle of disruptive shutdowns and reopenings that hint at lingering economic pain. Most economists predict the country will fail to meet its annual growth target for this year. Lockdowns have already roiled global supply chains and impacted the operations of global giants from Sony Group Corp. to Tesla Inc.
The Chaoyang district in eastern Beijing, where the bar is located, will begin a three-day mass Covid testing drive from Monday. All 65 cases discovered on Saturday were linked to the bar cluster. Shops and restaurants in the Sanlitun area of Chaoyang will be closed for three days through Wednesday.
Shanghai lifted its two-month lockdown on June 1, but briefly shut down most of the city Saturday to undertake mass testing. Residents earlier rushed to stock up on basic supplies in fear a positive case in their compound would mean they’re sealed into their homes. Five cases were found in the community as of 5 p.m. Sunday, while some districts will be allowed to resume dine-in services on a trial basis.
Shanghai’s worst outbreak began in March in part stemming from lapses at a quarantine hotel. A dozen officials from Xuhui district were dismissed from their posts or given warnings after malpractice in implementing quarantine measures led to infections at Hua Ting Hotel in the same month, the Shanghai government said late Saturday. They included a party secretary, the district chief and two district vice governors.
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China is unlikely to shift its Covid-Zero approach any time soon, with President Xi Jinping preparing for a Communist Party leadership reshuffle later this year at which he’s expected to secure a precedent-breaking third term as president. China’s leader has called on his government to adhere “unwaveringly” to its virus strategy, while striking a balance with the needs of the economy and social stability.
Defense Minister Wei Fenghe on Sunday praised China’s virus policy, saying the country is one of the safest in the world with the lowest Covid-19 induced death rate. In a speech to Asia’s biggest security conference in Singapore, Wei called China’s Covid response a miracle and said its success is a major contribution to the global fight against the pandemic.
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