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Shanghai grapples with China's new COVID wave in echoes of 2020

Disneyland, shopping centers and cinemas feel pinch from restrictions

Residents line up at a makeshift COVID-19 testing site in Shanghai. (cnsphoto via Reuters)

SHANGHAI -- China's resurgence of coronavirus infections has hit cities like Shanghai that are engines of consumer spending, as the government holds the line on a strict "zero COVID" policy.

Shanghai, home to about 25 million people, needs to "quickly identify potential infection sources and cut off transmission routes," a city official said at a news conference Wednesday, announcing new measures.

In neighborhoods particularly hit hard, apartment buildings are required to lock down for 48 hours even without any cases -- and no one is allowed to leave until all residents test negative on two PCR tests during the isolation period.

"This is getting close to how things were in early 2020," said one Shanghai man.

Since China's first case of the omicron variant was confirmed in Tianjin in December, the virus has been spreading across China, with daily new infections in the mainland exceeding 5,000 on March 14. Thursday's count was lower at 4,292, but the virus is spreading fastest in major cities.

People wait for takeout at a Shanghai McDonald's closed for indoor dining. (Photo by Naoki Matsuda)

President Xi Jinping shows no signs of relaxing his stringent zero COVID policy. On Thursday, Xi told officials to contain the pace of spread as swiftly as possible.

Shanghai's West Nanjing Road, a usually bustling street lined with office and commercial buildings, was deserted this week as many restaurants were ordered to close temporarily. Even those that stayed open, including KFC and McDonald's, offered only takeout or delivery options.

The zero COVID policy has hit restaurants hard. Yum China, which operates such chains as KFC and Pizza Hut, has suspended on-site dining, or paused operations altogether, at 1,100 restaurants -- nearly 10% of its nationwide network, as of March 13. Yum China's sales for the first two weeks of March were down 20% on the year.

Visitors to Shanghai Disneyland are required to show a negative result on a PCR test taken within 24 hours.   © Reuters

Tourist destinations are also affected. Shanghai Disneyland is open but at reduced capacity and visitors are required to show a negative result on a PCR test taken within 24 hours. Yu Garden, a classical Chinese garden, has been closed since March 10, while major shopping malls have been shut down temporarily as well.

Cinemas have not been spared. About 30% of all movie theaters in China -- or 3,690 locations -- were temporarily closed as of March 14, according to a local research company. All theaters have temporarily closed in cities such as Shanghai and Shenzhen, likely weighing on the bottom line of conglomerate Dalian Wanda Group, which runs close to 800 theaters across China.

Meanwhile, online retailers are enjoying booming demand, just as they did two years earlier. Alibaba Group-owned online grocery store Fresh Hema has been inundated with orders from people stuck at home, and is recruiting new delivery staff members in cities like Shanghai and Shenzhen. Food delivery leader Meituan is having the same issue.

An extended lockdown would also provide a tailwind for businesses like Tencent's online games and ByteDance's TikTok.

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