Omicron breaches political, financial centers of China ahead of Winter Olympics

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Omicron breaches political, financial centers of China ahead of Winter Olympics

Omicron has breached the political, financial and technology centers of China for the first time, putting pressure on the country's response to the more transmissible variant as it waits for the Winter Olympics in less than three weeks.

China has detected locally-transmitted omicron infections in the capital Beijing, the financial center Shanghai and Guangdong - where the southern technology center of Shenzhen is located - areas which together account for one-fifth of the country's gross domestic product. One out of every five provinces have reported imported cases of the highly mutated strain, while 14 of them have reported imported cases.

The flareups are still very small in number, but they cause consternation because of their timing, in addition to their location. The Lunar New Year holiday, an event marked by mass travel as millions return from urban centers to attend large family gatherings, begins in two weeks on February 1. The Beijing Winter Olympics are scheduled to begin later this week on February 4.

The delta strain of COVID- 19 that has been simmering in the world's most populous country for more than a month is being added to the outbreak of omicron. 166 domestic cases were found in China on Sunday, according to the National Health Commission. The latest epicenter, in the northern city of Tianjin, reported a record high of 80 new daily cases.

Previous outbreaks took place in less economically important areas, like the northwestern city of Xi and central Henan province. The simultaneous emergence of omicron in Beijing, Shanghai, and Guangdong is creating bigger obstacles for government officials because aggressive efforts to contain the virus, including lockdown measures, are less feasible in politically and economically crucial areas.

Local governments are ramping up targeted measures as part of the COVID zero approach. Existing tests can find omicron, providing reassurance about their ability to help contain outbreaks, officials said at a health commission briefing over the weekend. One of China's key strategies is to mass test entire city populations multiple times to find out if there is an undetected spread.

The policies that are already in place have hurt tourism and restaurant spending over the past two years, and have undercut private consumption. The rise in omicron cases is likely to curtail travel ahead of the Lunar New Year, with many cities asking people not to travel.

According to Liu Peiqian, China economist at NatWest Group PLC, China's zero COVID strategy is still a big restraining factor on consumption, and it doesn't look promising for the first quarter. Retail sales are likely to be sluggish for a while, in Beijing, authorities ask everyone who comes to the city to get an additional COVID- 19 test within 72 hours of arrival, starting on January 22, after its first omicron infection was reported on Saturday. They already have a negative test within two days of traveling to the city and a green health code that shows they haven't been in any known high-risk environments.

The person who contracted the first known omicron infection in Beijing received international mail that tested positive for the disease, said Pang Xinghuo, an official with the city's health agency. The strain is consistent with the circulating virus in North America and Singapore. The city isn't ruling out the possibility that the patient has been infected by mail delivered from overseas, Pang said. All 69 of the person's close contacts have tested negative.

Previously, officials said they may suspend inbound flights and ticket sales from cities where the virus is circulating.

There is concern that COVID 19 controls that have a negative impact on private consumption will hurt the industry. In the first quarter, factory output is usually weaker due to slower exports after Christmas and the Lunar New Year shutting domestically, but additional restrictions on factories, truck drivers or ports could further entangle already congested international supply chains.

A sustained outbreak with nearly 300 infections to date seems to be ebbing in Tianjin, the northern port city that borders Beijing, according to a national health official. According to He Qinghua, an NHC official, the spillover risk is gradually declining as more new cases have been detected among people in quarantine.