Shanghai to lift 'unreasonable' curbs on firms, Beijing eases restrictions

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Shanghai officials said Sunday "unreasonable" curbs on businesses will be removed June 1 as it looks to lift its COVID-19 lockdown. And Beijing reopened parts of its public transportation and some malls and other venues as infections stabilized.

The Chinese commercial hub of 25 million people aims to essentially end a two-month lockdown Wednesday that has severely damaged the economy and seen many residents lose income, struggle to source food and cope with isolation.

The painful coronavirus curbs in major Chinese cities run counter to trends seen in the rest of the world, which has largely tried to return to normal life even as infections spread.

Shanghai, China's most populous city, will end many conditions for businesses to resume work June 1. The city also launched measures to support its economy, including reducing some taxes on car purchases, accelerating issuance of local government bonds and speeding up approvals of real estate projects.

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Shanghai will ask banks to renew loans to small and medium firms worth a total of 100 billion yuan ($15 billion) this year.

"We will fully support and organize the resumption of work and production of enterprises in various industries and fields," Vice Mayor Wu Qing told reporters, adding that "unreasonable" COVID restrictions on businesses would be lifted.

Wu did not give details of which restrictions would be canceled.

Workers in protective suits rest on a street during lockdown amid the COVID-19 outbreak in Shanghai, China, May 28, 2022.  (REUTERS/Aly Song)

Shanghai in April started publishing "white lists" of important manufacturers in the auto industry, life sciences, chemicals and semiconductors allowed to resume operations.

But many of the priority companies had suppliers who were unable to reopen, so they still faced logistical bottlenecks.

Many industry executives also complained about onerous COVID curbs because they needed to find sleeping quarters for staff trying to isolate and to implement rigorous disinfection. Most businesses in the city are still shut.

All "white lists" would be abolished, Wu said.

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Earlier on Sunday, city government spokeswoman Yin Xin said Shanghai would ease testing requirements beginning Wednesday for people who want to enter public areas to encourage a return to work.

"The current epidemic situation in the city continues to stabilize and improve," Yin said, adding Shanghai's strategy was "pivoting towards normalized prevention and control."

People entering public venues or taking public transportation would need to show a negative PCR test taken within 72 hours, up from 48 hours previously.

Bus service within the Pudong New Area, home to Shanghai's largest airport and the main financial district, will fully resume by Monday, officials said.

Shoppers wearing face masks line up outside a store of French luxury brand Celine at a reopened shopping mall amid the COVID-19 outbreak in Shanghai, China, May 29, 2022.  (REUTERS/Brenda Goh)

Plaza 66, a mall in central Shanghai that hosts Louis Vuitton and other luxury brands, reopened Sunday.

Authorities have been slowly relaxing curbs, with a focus on getting manufacturing going again.

More people have been allowed to leave their homes, and more businesses can reopen, though many residents remain largely confined to housing compounds, and most shops are only open for delivery service.

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Private cars are not allowed out without approval, and most of the city's public transportation is shut down. Authorities have yet to announce detailed plans for how the lockdown will be lifted.

In the capital of Beijing, libraries, museums, theaters and gyms were allowed to reopen Sunday, though with limits on numbers of people in districts that have seen no community COVID cases for seven consecutive days.

The districts of Fangshan and Shunyi will end work-from-home rules, while public transportation will largely resume in the two districts as well as in Chaoyang, the city's largest. Still, restaurant dining is banned throughout the city.

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Shanghai reported just over 100 new COVID cases Sunday, while Beijing recorded 21, both in line with a falling trend nationwide.

China's economy has shown signs of recovery this month following an April slump, but activity is weaker than last year and many analysts expect a second-quarter contraction.

A man crouches on a roadblock at a main shopping area during lockdown amid the COVID-19 pandemic, in Shanghai, China, May 26, 2022.  (REUTERS/Aly Song)

The strength and sustainability of any recovery will depend largely on COVID, with the highly transmissible omicron variant proving hard to wipe out and prone to comebacks.

Investors have worried about the lack of a roadmap for exiting the zero-COVID strategy of ending all outbreaks at just about any cost, a signature policy of President Xi Jinping. He is expected to secure an unprecedented third leadership term at a congress of the ruling Communist Party in the fall.

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Markets expect more support for the economy.

"We expect policies to ease further on the fiscal front to boost demand given downward pressures on growth and the uncertainty of the recovery pace," Goldman Sachs analysts wrote in a note Friday.