FirstFT: China braces for more lockdowns

China is at risk of more frequent lockdowns and mass testing as officials struggle to contain the spread of the highly transmissible BA.5 Omicron subvariant despite the damage pandemic restrictions have already wrought on the world’s second-biggest economy.

Forty-one Chinese cities are under full or partial lockdowns or district-based controls, covering 264mn people in regions that account for about 18.7 per cent of the country’s economic activity, according to an analysis released on Monday by Japanese investment bank Nomura.

That marked a deterioration from the situation a week ago, when curbs were imposed in 31 cities covering 247.5mn people and representing 17.5 per cent of the economy.

China’s zero-Covid policy, which aims to eradicate coronavirus completely, has heaped pressure on officials to stamp out chains of transmission and hampered economic growth.

If you live in China, are you making preparations for another lockdown? Share your plans and thoughts with me at firstft@ft.com. Thanks for reading FirstFT Asia. — Emily

Five more stories in the news

1. Sri Lanka declares state of emergency Acting president Ranil Wickremesinghe has declared a nationwide state of emergency, two days before the country’s parliamentarians are set to pick a replacement for a president who had fled the country after months of unrest.

2. Europe hit by record heatwave Record-breaking temperatures across parts of the UK caused disruption to travel, schools, hospitals and the electricity grid on Monday, as infrastructure experts and climate change scientists called on the government to plan better for extreme weather. Four other European nations declared states of emergency or issued red alerts as temperatures break records across the continent.

3. US bank earnings reflect recession fears Goldman Sachs on Monday warned it would slow hiring and may cull underperforming staff, even as the Wall Street giant’s traders helped it overcome a slump in dealmaking and report better than expected profits in the second quarter. Bank of America reported a 32 per cent drop in net income — a fall that was cushioned, at least for now, by consumer spending.

4. Khan demands early elections after dominating Punjab poll Imran Khan has won a critical victory in by-elections in Pakistan’s most populous province, putting the former prime minister on track to force early parliamentary polls just months after he was ousted from office.

5. Volodymyr Zelenskyy fires security chiefs over ‘treasonous’ officials Ukraine’s president dismissed his head of the state security service and chief prosecutor yesterday for allegedly allowing collaboration with Russian forces by scores of officials in occupied territories.

The day ahead

US Treasury secretary visits South Korea Janet Yellen is set to meet President Yoon Suk-yeol and other senior officials in Seoul today. During her meetings Yellen will push for a price cap on Russian oil. (Reuters)

Earnings Companies reporting results today include Halliburton, Hasbro, Johnson & Johnson, Lockheed Martin, Netflix, Novartis, Swedbank, Telenor and Volvo Cars.

US lawmakers vote on subsidies for chipmakers Chuck Schumer, the Democratic leader in the Senate, will call a vote on a long-awaited $52bn package of subsidies to US chipmakers as soon as Tuesday as he tries to put pressure on others in Congress to back it.

Putin in Iran for trilateral Syria talks Putin will meet Turkey’s president Recep Tayyip Erdoğan and Iran’s president Ebrahim Raisi in Tehran on Tuesday to discuss Syria. A Black Sea access deal could also be sealed when Putin and Erdoğan meet. (Euro News, FT)

What else we’re reading

Japan struggles with self-regulation during crypto meltdown While the industry’s most important annual conferences celebrated the opportunities of blockchain technology in a “alcoholic and optimistic” manner, industry executives, lawyers and current and former financial regulators sounded the alarm over a spiralling regulatory crisis in Japan’s multibillion-dollar virtual asset business.

‘Power of Siberia 2’ to break down in 2024, Mongolia says The central Asian country expects Russia to begin construction of the “Power of Siberia 2” gas pipeline through its territory to China within two years, as Moscow moves to connect its Europe-supplying gasfields to Asia for the first time.

Half a trillion dollars wiped from once high-flying fintechs Digital companies that boomed during lockdowns have been hit by fears they cannot withstand a recession. Their cumulative market capitalisation has fallen $156bn in 2022. If each stock is measured from its all-time high, around $460bn has been lost.

‘Could we just adapt to climate change? The answer is no’ For Corinne Le Quéré, one of the world’s experts on global emissions, there is no great revelation in the UK’s record-breaking temperatures. “It is so predictable how climate change is unfolding,” she says, in her office at the University of East Anglia, in Norwich, eastern England. “It’s like a train moving forward,” she said in an interview with FT’s Henry Mance.

How to solve the productivity paradox Since the computer age dawned in the 1970s, we have lived with a sense of accelerating progress and innovation. Yet the postwar productivity boom has ended: except for a revival at the turn of the century, productivity has trended downward for more than 50 years. Ruchir Sharma asks, what can we do about it?

Fashion

In the Tory leadership race, there are no style winners, write Carola Long and Robert Armstrong. From Liz Truss’s Thatcher throwbacks to Rishi Sunak’s too-slick suits: how the frontrunners’ wardrobes are — or are not — helping their campaigns.