Date: Friday, April 15th
Source: Wall Street Journal
Localized Covid-19 lockdowns are proliferating across China, suggesting Shanghai’s struggle to contain the virus might be the prelude to a broader battle that threatens to hobble the world’s second-largest economy.
Chinese health authorities on Thursday reported more than 29,000 new infections, the highest daily tally since the pandemic began in the central city of Wuhan more than two years ago.
Strict measures appear to be working in China’s far Northeast, where local officials are declaring victory following an extended lockdown. Yet localized lockdowns are being newly imposed, expanded or extended elsewhere in the country, including the northern industrial city of Taiyuan, and the southern megacities of Guangzhou and Shenzhen.
Forty-five Chinese cities with a combined 373 million people had implemented either full or partial lockdowns as of Monday, a sharp increase from 23 cities and 193 million people a week earlier, according to a survey by Nomura. The 45 cities account for more than one-quarter of China’s population and roughly 40% of the country’s total economic output.
Beyond Shanghai, cities subject to either full or severe lockdowns together account for more than 12% of Chinese gross domestic product, according to China-focused research firm Gavekal Dragonomics.
Pandemic restrictions have contributed to falling property sales and steep declines in tourism and other services, and have threatened to affect spring planting of staple crops.
“There is clearly already significant disruption to the economy, with more to come before this drama ends,” Gavekal analyst Ernan Cui told clients in a recent note.
Despite that, China’s leadership is sticking with its so-called dynamic zero-Covid approach, shunting aside suggestions the country should try to live with the virus.
“China will not and cannot adopt such a defeatist and Darwinian method,” the official Xinhua News Agency said in an editorial published late on Wednesday.
With more than 95% of China’s new Covid-19 cases on Thursday, Shanghai continues to be the site of the most significant of the country’s lockdowns. Some residents in the country’s financial capital have been allowed to step outside of their apartment buildings in recent days, but those living in neighborhoods that are considered high-risk remain homebound. Travel into, out of and around the city of 25 million remains tightly controlled.
The nature of the lockdowns in Shanghai, where some of the country’s wealthiest citizens have suddenly found themselves struggling to procure food, has overshadowed the spread of lockdown measures elsewhere.
In the coal-producing province of Shanxi, roughly 800 miles to the northwest, the capital, Taiyuan, has been under a citywide lockdown since Wednesday, according to state media. Local health officials have reported around 90 new Covid-19 infections in recent days, including 37 on Wednesday.
“You can only enter the city, but can’t leave,” China Daily, China’s official English-language newspaper, said in a post on the Weibo social-media platform, attaching drone footage showing streets in the city of more than five million almost completely deserted. “All good things will come as expected!”
The manufacturing center of Kunshan, about 30 miles west of Shanghai, last week suspended public transportation and ordered the closure of nonessential businesses. The local government said late Tuesday that it has extended some of those measures by another week because of an increase in cases.
The city of Suzhou, which includes Kunshan, recorded 375 new Covid cases between March 10 and April 11, according to an official statement released Tuesday. Nearly half were detected in Kunshan.
“Right now the most important thing is for everyone to slow down and calm down. Please make sure to reduce all nonessential movement,” the city government said Wednesday. One Suzhou neighborhood with nearly 19,000 residents has been fully locked down since Tuesday.
Normally bustling streets in the southern city of Guangzhou have turned eerily quiet as local health officials impose targeted lockdowns to snuff out smaller clusters that have surfaced in recent days, according to residents. Local restaurants, gyms and movie theaters have been ordered closed, and a negative test result is required to leave the city, which reported 44 new local cases on Thursday.
A veteran Taiwan businessman who sells leather goods and has lived in Guangzhou for decades said the city’s current restrictions are the strictest he has seen since the onset of the pandemic.
“It was just about three months ago, when everyone here was so excited about starting this year, as we all thought the pandemic was finally going to be over,” said the businessman, who lamented damage to his business as a result of disruptions to logistics. “How could one imagine things suddenly becoming so bad?”
The nearby city of Shenzhen, which had already imposed and lifted a full lockdown in March, revived restrictions in one district on Thursday, according to a notice posted on Weibo.
In Changchun, the capital of northeastern China’s Jilin province, local police reported detaining one resident for allegedly inciting his neighbors to protest inconsistent food supplies by banging pots and pans together, and another who allegedly exploited his role as a food-delivery volunteer to help someone purchase a “nonessential” serving of spicy hot pot.
A strict, weekslong lockdown appears to have stemmed the spread of Covid-19 in parts of Jilin, at least for now, with Changchun declaring itself clear of community spread on Thursday.
But public-health experts caution that the Omicron variant’s extreme transmissibility makes it difficult to contain with lockdowns, given the limited accuracy of PCR tests and the impossibility of fully closing borders.
“They are incredibly strong-willed and determined to push out Covid-19,” Leong Hoe Nam, an infectious-disease specialist at Singapore’s Mount Elizabeth Novena Hospital, said of the Chinese effort. “However, I think it is a pipe dream to wash out Omicron.”
If the lockdowns persist and spread, the economic consequences are likely to ripple outward, according to economists.
Dozens of Taiwan-listed electronic manufacturers, including Pegatron Corp., the second-largest assembler of Apple Inc.’s iPhone, have halted production in Shanghai and nearby Jiangsu province to comply with local rules.
In Zhengzhou, capital of central China’s Henan province, tens of thousands of workers and other staff at a sprawling iPhone manufacturing facility run by Foxconn Technology Group that manufactures iPhones were required to undergo compulsory Covid-19 testing Thursday, according to a company notice.
Local authorities in Zhengzhou, which reported seven new cases Thursday, could follow Shanghai’s lead in halting operations if many positive cases are found.
“Foxconn is complying with the local government’s Covid-fighting measures, and the operations in Zhengzhou are running normally now,” the company said in a statement.
In March, the outbreak helped drive a 10.5% year-over-year decline in Chinese auto sales, the fastest decline in activity in the country’s service sector since the start of the pandemic and a 1.5% rise in consumer inflation—the fastest year-over-year gain in three months.
“All in all, China’s dynamic zero-Covid policy could ravage the Chinese economy if lockdowns continue,” Alicia García Herrero, chief economist for Asia Pacific at investment bank Natixis, wrote in a column for the Asia Times on Wednesday. “Beyond the reduced demand for imports from China, an even more immediate effect is inflation given the world’s dependence on China’s production of intermediate goods.”