Terrible damage in Shanghai due to Covid-19

The South China Morning Post (SCMP) on April 17 quoted an estimate by Professor of Economics Michael Song at the Chinese University of Hong Kong, that the prolonged Covid-19 blockade order in Shanghai could reduce the Gross Domestic Product. China’s monthly GDP (GDP) is from 2.5%-3%.

The estimate is based on a model written by Professor Song and four economists from Tsinghua University, Zhejiang University, Princeton University, and the University of Economics and International Business in a paper published this month.

The model uses truck traffic data in 315 cities from January 2019 to January 2022 to forecast the impact of the prolonged Covid-19 lockdown in Shanghai. Accordingly, the truck flows connected to the city as well as Shanghai’s real income decreased by 54%.

An area under lockdown in Shanghai on April 15. Photo: Reuters

China’s Ministry of Transport says truck traffic is an indicator of the health of the Chinese economy. Road freight transport accounted for 73.8% of China’s total national freight in 2020.

Professor Song warned that if more Chinese cities impose similar travel restrictions, the national economy could be hit harder.

As Shanghai faces its worst Covid-19 outbreak since 2020, neighboring cities, including Suzhou, Xuzhou and Yancheng in Jiangsu province also take emergency measures to prevent the spread of the virus. block or restrain the Omicron variant from spreading.

Research firm Gavekal Dragonomics says only 13 of China’s top 100 cities have not introduced public health-related restrictions, such as lockdowns and quarantines, while 73 cities account for 53 % GDP of the country does the same.

According to GS Song and his team, if China’s four largest cities, Beijing, Shanghai, Shenzhen and Guangzhou, were to all shut down for a month, the country’s monthly GDP could drop by as much as 8.6 %.

On April 17, Shanghai reported 24,820 new cases of Covid-19, including 3,238 symptomatic cases. The city’s total number of Covid-19 cases has now reached 350,000 as of March 1. The Shanghai Health Commission announced that it will conduct another round of Covid-19 tests in the coming days on 25 million residents.

Nationwide, China added 26,016 new cases of Covid-19 on April 17, mostly in Shanghai. Guangdong province has 40 more cases and Jilin province has 692 more cases. Up to now, China has recorded 182,293 Covid-19 cases and 4,638 deaths.