Beijing closed parks, shopping malls, and museums on Tuesday, while additional Chinese cities resumed mass testing for COVID-19, as China battles an increase in cases, heightening economic concerns and dampening hopes for a speedy reopening.

China reported 28,127 new local cases on Monday, nearing its daily peak in April, with infections in Guangzhou and Chongqing accounting for approximately half of the total.

Each day, the number of cases in Beijing reaches new heights, prompting city officials to urge residents to remain put.

Two new deaths have been attributed to COVID-19, compared to three over the weekend, which was the first in China since May.

The latest wave is putting to the test recent modifications China has made to its zero-COVID policy, which requires authorities to be more targeted in their crackdown measures and to avoid the widespread lockdowns and testing that have strangled the economy and frustrated residents.

The municipality of Tianjin, located near Beijing, became the latest to order citywide testing on Tuesday, following a similar announcement by Shijiazhuang on Sunday.

Even with the revised guidelines, China remains a global outlier due to its strict COVID restrictions, including borders that remain essentially closed nearly three years into the pandemic.

Even though China is attempting to avoid citywide lockdowns like the one that paralyzed Shanghai this year, the tightening measures in Beijing and other cities have renewed investor concerns about the economy and caused a drop in global stock and oil prices overnight.

Analysts at Nomura estimated on Tuesday that localities accounting for approximately 19.9% of China's total gross domestic product were under some form of lockdown or restrictions, up from 15.6% on Monday and close to the index's all-time high during Shanghai's lockdown in April.

Localized lockdowns

The Chinese capital issued a warning on Monday that it is facing its most severe test of the COVID-19 pandemic and tightened rules for entering the city, requiring arrivals from other parts of China to undergo three days of COVID testing before being allowed to leave their accommodations.

Numerous Beijing residents have experienced building lockdowns, although these restrictions typically only last a few days.

Some city residents reported experiencing delays in grocery deliveries due to high demand.

The Happy Valley amusement park and the city's vast Chaoyang Park, a popular location for runners and picnickers, announced Tuesday that they would close due to the outbreak. Beijing reported 1,438 new local cases, an increase from Sunday's figure of 962.

The central city of Wuhan, where the virus was discovered for the first time, issued a notice Tuesday advising its residents to only travel between their homes and places of employment.

Vice Premier Sun Chunlan, who has spearheaded China's zero-COVID policy, visited Chongqing on Monday and urged local authorities to adhere to the measures and bring the outbreak under control, according to a statement from the municipality.

Not as Rosy

Investors had hoped that China's more targeted enforcement of zero-COVID restrictions would signal a significant easing, but many analysts warn against being overly optimistic.

As customers continue to hoard cash, many businesses, particularly those with direct customer contact, fear they may not survive until next year.

China asserts that President Xi Jinping's signature zero-COVID policy saves lives and prevents the healthcare system from becoming overburdened.

In a country where the disease is still widely feared, full reopening requires a massive vaccination effort and a change in messaging, according to several experts. Authorities say they intend to expand hospital capacity and fever clinics for patient screening and are planning a vaccination campaign.

"The true picture may not be as rosy as it appears," Nomura analysts wrote, adding that they expected any reopening to accelerate only after March of next year when China's leadership reshuffle is complete.

"After observing a rapid increase in cases and social disruptions, policymakers might reconsider reopening the facility. As a result, local officials may be even more reluctant to make the first move when attempting to ascertain Beijing's true intentions "Nomura authored.