Cities in China tighten restrictions against Covid, and fear of economic impact grows

The city of Shanghai, China’s financial center under lockdown to contain an outbreak of Covid, recorded this Friday (15) a record number of symptomatic cases of the disease, while other areas of the country tighten sanitary measures to mitigate the spread of the virus. Local analysts predict economic consequences.

In the economic heartland of the Asian country, 3,590 symptomatic cases of Covid and another 19,923 asymptomatic cases were reported. Already across the country, about 24,800 new infections were registered, according to a report by the National Health Commission released this Saturday (16).

In the Zhengzhou Economic and Technological Development Zone, an industrial concentration area that counts, among others, with Foxconn, an important supplier to Apple, a 14-day blockade was announced, which can be extended according to the sanitary situation.

Only authorized employees who test negative for Covid will be allowed to leave the economic zone during this period, local officials said on an official account on Chinese messaging app WeChat. Foxconn told Reuters in a statement that it would cooperate with the local government’s decision and that operations at the factory’s Zhengzhou unit were, for now, normal.

In northwest China, officials in the city of Xian urged residents to avoid unnecessary travel outside their neighborhoods and encouraged companies to allow employees to work from home or sleep at work sites. A government official clarified that the measure does not constitute a lockdown and that there are no plans to enforce such a policy. Xian’s 13 million people were confined late last year to contain a local outbreak.

Residents of the city of Suzhou, near Shanghai, were also advised to work remotely, and businesses and residential complexes were instructed to avoid unnecessary vehicle entry.

The Covid zero policy adopted by the communist regime and adapted in recent months to a scheme named by the authorities of “dynamic authorization”, which aims to contain sporadic outbreaks of the disease without confining entire cities, continues to be described by senior regime officials as the best choice for contain Covid.

But the restrictions imposed, in addition to witnessing an ebb of domestic support, with a series of contrary manifestations in the virtual environment, have caused economic concern. The Japanese Consulate General in Shanghai, for example, sent a letter to the local government on Saturday asking the administration to be aware of the possible and likely consequences for Japanese companies.

Consul Shuichi Akamatsu acknowledged the city’s efforts to contain the spread of the coronavirus. “However, with the extension of virus control measures, the impossibility of continuing with production at normal levels has already lasted more than a month,” he added. “The impact on business activities is clearly becoming more severe by the day, there is no room for optimism about the current reality.”

Goldman Sachs experts called, in a note, for policy flexibility. “Public policymakers may favor the use of more fiscal measures such as accelerating the construction of large infrastructure projects and easing monetary policy to jumpstart the economy going forward.”

Local analysts say widespread supply chain disruptions are likely to lead to supply delays for companies like Apple and have consequences for Chinese economic growth this year.

Experts contacted by the AFP agency project that the lockdown in Shanghai, for example, tends to reverse the gains of the Chinese economy observed at the beginning of the year. Officials had set a 5.5% increase in Chinese GDP for 2022 — the lowest target in decades. Twelve financial institutions, however, estimate average growth of 5% for the year and 4.3% in the first quarter.

About 86.2% of the Chinese population has completed the first vaccination course, show data compiled by the Our World in Data platform. The booster dose was given to more than 49% of the inhabitants.