June 14, 2024

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As China struggles to cope with the virus, industries that control the coronavirus are facing decline

As China struggles to cope with the virus, industries that control the coronavirus are facing decline

BEIJING (Reuters) – Like most Chinese, Beijing resident Wang was pleased and relieved to hear last week that China was abandoning almost all restrictions on its coronavirus policy. A day later, the 43-year-old lost her job as one of the city’s many hazmat-appropriate COVID swab testers.

“The leader of our group told me personally that I was no longer needed because of the new policy,” she told Reuters, declining to give her full name.

In the wake of unprecedented protests over draconian lockdowns, the Chinese government eased some restrictions early this month before abruptly abandoning most control measures – including the mandatory mass PCR test that was conducted in most parts of the country.

This turnaround meant an overnight change in fortunes for those companies as well as companies involved in quarantine, COVID tracking and movement control products and services.

Industries have become big business over the course of the pandemic and are huge employers even if accurate statistics can be hard to come by.

Analyst estimates compiled by Reuters in May had put China’s Covid-related spending this year – of which these industries accounted for a large part – at about $52 billion.

Even some less conservative estimates have put the potential cost of mass testing this year alone – with travelers in major cities requiring negative tests every day or two – at 1.5% to 1.8% of China’s GDP – more than that of Qatar.

bids fell

A Reuters review of the bids showed that over the past two weeks, more than 30 local governments canceled bids for services and products related to combating the Corona virus.

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This included a tender to regularly disinfect a quarantine hotel in Shenzhen, one for lockdown supplies for a sub-district in Chengdu and one to refurbish a COVID testing laboratory in Shandong Province.

Some have also dropped plans to buy software that tracks the spread of COVID or alarms for the doors of people under lockdown to monitor if they have left their homes.

“According to the national policy and changes in the epidemiological situation, the buyer has now finished the nucleic acid sample distribution service project in Gongshu District, Hangzhou,” read one ad posted on Tuesday, referring to the PCR test.

Companies that reaped huge profits from mass PCR testing have seen their shares plunge this month. Shanghai Lapuai Clinical Laboratory (301060.SZ) Decreased 11%, Guangdong Hebribio (300639.SZ) down 8% while Dian Diagnostics Group Co Ltd (300244.SZ) It lost 5%.

The two companies did not respond to Reuters requests for comment.

It remains to be seen how painful China’s dismantling of infrastructure to control COVID will be for businesses and their employees.

Over time, returning to more normal economic activity should help more people find jobs. Local governments are also expected to divert resources to deal with COVID.

A new vaccination campaign in China that focuses on the elderly could create jobs for laid-off testers while local authorities may hire staff to support vulnerable or elderly residents who stay home, said Alicia Garcia Herrero, chief economist for Asia and the Pacific at Natixis.

“All the money that went into mass testing, it’s not just going away, when expenses increase like this, it’s hard to cut back.”

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Wang, who only got her job as a swab tester less than three weeks before she was laid off, said it was troublesome to go back looking for work again. But she didn’t seem to mourn the loss of work, which meant walking for hours on end in a sweat suit while dealing with angry residents.

“At least the economy will improve with these changes, so it will be easier for me to find a job,” she said.

($1 = 6.9605 CNY)

(Reporting by Eduardo Baptista) Editing by Brenda Goh and Edwina Gibbs

Our standards: Thomson Reuters Trust Principles.