BEIJING (AP) — As millions of Shanghai residents line up to get tested for the coronavirus in the confined metropolis, authorities are promising tax breaks for entrepreneurs and keeping its busy port open to limit disruptions to industry and trade. trade.
The closure of most of the activity decreed this week in China’s most populous city to contain the outbreaks of COVID-19 shook financial markets already nervous about Russia’s war in Ukraine, the rise in interest rates in the United States and the slowdown in the Chinese economy.
The ruling Communist Party is trying to adjust a “zero tolerance” approach to the pandemic to curb job losses and other costs in the world’s second-largest economy.
The Shanghai government has announced tax rebates, rent reductions and low-cost loans for small businesses. In a statement, local authorities pledged on Tuesday to “stabilize jobs” and “optimize the business environment.”
In the port of Shanghai, the busiest in the world, operations were carried out normally and managers made extra efforts to ensure that ships “can dock” without incident, according to state television. The port serves the river delta Yangtze, one of the largest manufacturing regions that has manufacturers of smartphones and car parts, among other products.
Airports and train stations were unaltered, according to the online newspaper The Paper. Bus service in and out of the city of 26 million people was suspended earlier. Visitors have to show a negative coronavirus test.
Overseas, the biggest hit to China’s neighbors and the rest of the world could come from events that dampen demand in the world’s most populous consumer market, according to economists.
China is the largest trading partner of all its neighbors, including Japan and South Korea.
The forecast for economic growth was expected to drop from 8.1% last year due to the government’s drive to reduce corporate debt and other challenges unrelated to the pandemic. The objective of the Communist Party is 5.5%, but forecasts indicate that it seems difficult to achieve and that it will require stimulus spending.
However, the impact of the lockdown in Shanghai should be “relatively moderate” if the outbreak is contained as well as it was before in Shenzen, a business hub in the south of the country, said Rob Carnell, ING’s chief economist for Asia.
Shenzhen, a technology and financial hub of 17.5 million people, imposed similar measures in mid-March and reopened a week later.
Employees in financial industries can work from home, while automakers and other big companies can have employees live in factories in a kind of “bubble” to isolate them from the outside.