Silicon Valley in Shenzhen, China orders manufacturing to stop COVID-19 control

BEIJING – Mainland China is facing its worst outbreak of Covid-19 since the country tightened its grip on the pandemic in 2020, as major cities rush to limit trade activity.

Shenzhen, the largest city in the production hub of Guangdong Province, told all companies not operating in essential public services to suspend production or allow employees to work from home for a week from Monday. The production halt was said to include apple supplier Foxconn, which did not immediately respond to CNBC’s request for comment.

The city, also known as China’s “Silicon Valley”, has closed public transportation and started a third round of citywide testing. Shenzhen has reported more than 400 confirmed cases since late February.

Those numbers and the number of cases across China pale in comparison to other countries. But the rapid increase in the number of cases in recent days has prompted local authorities to rush to control the outbreak as China wants to maintain its Covid-free strategy.

Shanghai, the coastal capital home to many foreign companies and financial institutions in China, has turned schools into online classes. Some neighborhoods have been locked down and undergone extensive testing, and residents usually cannot leave until results come back negative.

On Saturday, the city asked its residents not to leave Shanghai unless absolutely necessary. More than 600 confirmed cases have been found since the end of February.

Jilin Province in northern China reported an increase of more than 1,000 local cases of the novel coronavirus at the end of last week, bringing the total to more than 2,900 as of Sunday this month.

In all, mainland China reported 1,437 new confirmed cases on Sunday – with just 100 attributed to travelers from abroad – for a total of 8,531 active locally transmitted cases. This is the largest number since March 2020. No new deaths have been reported.

Hong Kong, a special administrative region across the border from Shenzhen, has seen a resurgence of COVID cases in recent weeks. The region has the world’s highest rate of new Covid-related deaths per million people, according to Our World in Data.

The outbreak in Hong Kong stems from the highly contagious Omicron strain, which has since spread to the mainland.

The capital, Beijing, said Sunday that it had identified six sources of transmission of the latest number of municipal cases, most of which were reported around the city center and eastern parts of the city. Local authorities have said that anyone who returns to Beijing will not be allowed to attend the meetings for seven days after their arrival.

For several months, the capital has had one of the country’s strictest anti-COVID-19 policies. Travelers must show a negative Covid test taken 48 hours before entering Beijing and retest within 72 hours of arrival. If their 14-day travel history shows that they have visited an area with a confirmed case, they will not be allowed to enter the city.

After Covid-19 emerged in Wuhan in late 2019, mainland China shut down more than half of the country in February 2020 to contain the outbreak. Domestically, the virus was brought under control within weeks, but Covid has spread abroad in a global pandemic.

On Monday, South Korea, followed by Germany, had the most new cases in 28 days with 5.2 million and 4.8 million, respectively, according to data from Johns Hopkins. The United States recorded the largest number of deaths, exceeding 967,000 as of Monday morning in Beijing.

Mainland China has maintained a strict “no COVID” policy for the past two years. Travel restrictions and the possibility of a rapid shutdown have affected domestic tourism and service companies, resulting in lower consumer spending.

The annual parliamentary meeting that concluded on Friday gave no indication that the central government intends to ease its policy to contain the Covid virus, although official statements in recent months have added terms such as “dynamic”.

Deputy Prime Minister Sun Chunlan said Saturday at a government meeting on epidemic control that the country should continue to follow the “dynamic” policy of not spreading the COVID-19 virus and that all measures should be taken to prevent the virus from spreading widely. The emergence of the virus.

Her comments, reported by state media, ended with a call to pave the way for a large gathering of the ruling Chinese Communist Party later this year. Chinese President Xi Jinping is expected to receive an unprecedented third term at the meeting.

The dumping of Zero Covid “can now be taken as an admission that the strategy didn’t work in the first place,” Nomura’s chief Chinese economist, Ting Lu, said in a note on Friday.

“The next 12 months is a critical period for a leadership transition once a decade, and this is what prompts senior leaders to stick to the status quo to avoid policy mistakes,” he said. “Photos of several Covid patients in Hong Kong treated outside crowded hospitals have convinced Chinese officials and the public that ZCS is China’s only viable solution to the coronavirus.”

The Chinese Center for Disease Control and Prevention published a study in November that said the shift to a coexistence strategy in other countries would likely lead to hundreds of thousands of new daily cases and devastate the national medical system.

But Lu said that the economic costs of the zero virus eradication strategy are rising, while the benefits are declining.

“Amid rounds of lockdowns and travel bans across China, more and more people are feeling tired, exhausted, out of work or out of work and have exhausted their savings to the level they need to cut back,” he said.