SHANGHAI, May 28 (Reuters) – The Chinese metropolis of Shanghai inched further towards a gradual reopening from two months of grinding COVID-19 lockdown, while officials in Beijing prepared to ease curbs in parts of the capital, saying on Saturday its outbreak was under control.Shanghai aims to essentially end its lockdown from Wednesday after relaxing restrictions over the last week.More people have been allowed out of their homes, and more businesses permitted to reopen, though most residents remain largely confined to their housing compounds, with shops mainly limited to deliveries.Shanghai officials urged continued vigilance, even though the vast majority of its 25 million residents live in areas that are in the lowest-risk “prevention” category.”Wear masks in public, no gathering and keep social distance,” Zhao Dandan, deputy director of the Shanghai Municipal Health Commission, told a daily news conference.Videos on social media showed Friday night revellers including many foreigners drinking and dancing in the street in a central area of the city before police interrupted and told them to go home.Another video showed a group in the street singing an emotional 1985 pop anthem called “Tomorrow will be better”, accompanied by a keyboard player. Police can be seen arriving and allowing the song to finish before asking the people to go home, prompting online praise for the officers’ restraint.The two-month lockdown of China’s largest and most cosmopolitan city has frustrated and infuriated residents, hundreds of thousands of whom have been quarantined in often crowded central facilities.Many of them struggled to access sufficient food or medical care during the lockdown’s early weeks.’UNDER CONTROL’In Beijing, new cases have trended lower for six days, with no fresh infections outside of quarantine areas reported on Friday.The outbreak that began on April 22 is “effectively under control”, a city government spokesman told a news conference.Starting on Sunday, shopping malls, libraries, museums, theatres and gyms will be allowed to reopen, with limits on numbers of people, in the eight of Beijing’s 16 districts that have seen no community cases for seven consecutive days.Two of the districts will end work-from-home rules, while public transportation will largely resume in three districts including Chaoyang, the city’s largest. Still, restaurant dining remains banned city-wide.While nationwide case numbers are improving, China’s strict adherence to its “zero-COVID” strategy has devastated the world’s second-largest economy and rattled global supply chains.Investors have been worried about the lack of a roadmap for exiting what has been a signature policy of President Xi Jinping.The economic impact was evident in data on Friday showing April profits at industrial firms fell an annual 8.5%, the biggest drop in two years. China’s approach, which the government says is needed to save lives and prevent the health system from being overwhelmed, has been challenged by the hard-to-contain Omicron variant.The conflict between vanquishing the spread of COVID and supporting the economy comes in a politically sensitive year, with Xi expected to secure an unprecedented third leadership term at a congress of the ruling Communist Party in the autumn.During an emergency meeting on Wednesday, Premier Li Keqiang acknowledged weak growth and said economic difficulties had been worse in some aspects than in 2020 when China was initially hit by COVID-19. His remarks prompted market expectations of further economic support measures.SMALL STEPSOn Friday, Shanghai’s suburban Fengxian district cancelled a requirement for residents to have a pass to go out.The state-run Shanghai Securities News reported modest steps towards a return to normality for the financial sector, with the more than 10,000 bankers and traders who have been living and working in their offices since the start of lockdown gradually returning home.The country on Saturday reported 362 daily coronavirus cases, down from 444 a day earlier. In Beijing, new Friday infections fell to 24 from 29.While Shanghai officials reported one community-level case in the Songjiang district, they expressed confidence in the steps they were taking to trace and control the infection chain.”If these measures are implemented effectively, we can prevent a rebound of the epidemic even if there are sporadic cases, so don’t worry,” said Sun Xiaodong, deputy director of the Shanghai Center for Disease Control and Prevention.