It’s the biggest challenge to China’s strategy since the virus was first detected in Wuhan, the central Chinese city that saw the world’s first lethal outbreak. The country’s strict anti-virus measures, which include mass testing as soon as a case appears, aggressive contact tracing, widespread use of quarantines and targeted lockdowns, have crushed more than 30 previous flareups over the past year.

The arrival of the more infectious delta variant, however, is testing even that approach. The new strain may be exploiting an easing off in masking and social distancing in some places, since much of the country has been Covid-free for months. That, along with increased travel for summer vacation, created an environment where delta could gain a foothold.

China reported 99 infections on Monday, including 44 who tested positive but have no symptoms. Later in the day, seven more people were found to be infected in Wuhan, plus another in Beijing. By number of cases, it’s the biggest outbreak since a flareup in Hebei province in northern China in January, when
2,000 people were infected.

The broad spread is even more concerning, given the rise of cases in the highly protected capital and in Wuhan, whose virus- free status has been a source of pride in China. The seven new cases there are the first since China brought its original wave under control by locking down the city of some 11 million and
the surrounding Hubei province.

Eoin Treacy's view

China’s stringency in locking down areas where infections are found and testing everyone is likely to keep the current spate of infections from getting out of control. However, the ease with which the Delta variant spreads represents a significant challenge because an increasingly large proportion of the country will need to be locked down. The biggest challenge is the Sinovac vaccine is considerably less effective than MRNA versions, so China will need to double down on its vaccination program before a long-lasting return to normal can be achieved. 

China is actively supporting the stock market at present and will certainly be at pains to exude a sense of calm as containment measures are ramped up.