People line up for nucleic acid samples in Shanghai, China, March 12, 2022.
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BEIJING — Mainland China is facing its worst Covid-19 outbreak since the country put down the pandemic in 2020, with major cities rushing to curb business activity.
Shenzhen, the largest city in Guangdong’s manufacturing hub, has ordered all non-essential public service businesses to suspend production or force employees to work from home for a week starting Monday. Production was reportedly halted, including by Apple supplier Foxconn, who did not immediately respond to a CNBC request for comment.
The city, sometimes referred to as China’s “Silicon Valley,” shut down public transportation and began a third citywide testing phase. Since the end of February, Shenzhen has recorded more than 400 confirmed cases.
These numbers and the number of cases in China pale in comparison to other countries. But a rapid rise in cases in the past few days is forcing local authorities to rush to control the outbreak as China seeks to maintain its zero-Covid strategy.
Shanghai, the coastal metropolis where many of China’s foreign businesses and financial firms are based, has returned schools to online classes. Some areas have quarantined and mass tested, and residents are generally unable to leave until the results are negative.
On Saturday, the city ordered residents not to leave Shanghai unless absolutely necessary. Since the end of February, more than 600 confirmed cases have been identified.
North China’s Jilin Province reported a sharp spike over the weekend in more than 1,000 new cases of locally infected coronavirus, for a total of more than 2,900 cases this month as of Sunday.
Overall, mainland China reported 1,437 new confirmed cases as of Sunday, of which only 100 involved travelers from abroad, for a total of 8,531 active domestic cases. This is the highest since March 2020. No new deaths have been registered.
Hong Kong, a special administrative region across the border from Shenzhen, has struggled with a surge in Covid cases in the past few weeks. The region has the highest number of new Covid-related deaths per million people in the world, according to Our World in Data.
The outbreak in Hong Kong is associated with a highly contagious omicron variant that has since spread to the mainland.
Beijing on alert
The Beijing capital said on Sunday it had identified six sources of transmission for the last few municipal cases, mostly reported in the center and eastern parts of the city. Local authorities have said that anyone returning to Beijing must not attend meetings for seven days after arrival.
For months, the capital has had one of the strictest Covid control policies in the country. Travelers must present a negative Covid test taken 48 hours before entering Beijing and take another test within 72 hours of arrival. If their 14-day travel history shows that they have visited a place with a confirmed case, they are not allowed into the city.
Following the emergence of Covid-19 in Wuhan in late 2019, mainland China shut down more than half of the country in February 2020 to control the outbreak. Domestically, the virus was brought under control within a few weeks, but Covid has spread abroad as a result of a global pandemic.
South Korea, followed by Germany, had the highest number of new cases in 28 days, at 5.2 million and 4.8 million, respectively, as of Monday, according to data from Johns Hopkins University. The US has the highest number of deaths, with over 967,000 as of Monday morning Beijing time.
Zero-Covid will not disappear
Mainland China has maintained a strict “zero Covid” policy for the past two years. Travel restrictions and the possibility of a quick lockdown have negatively impacted domestic tourism and services, pushing down consumer spending.
The annual parliamentary meeting, which ended on Friday, gave no indication that the central government plans to loosen its Covid control policy, although terms such as “dynamic” have been added to official statements in recent months.
Vice Premier Sun Chunlan told the government’s epidemic control meeting on Saturday that the country should continue to pursue a “dynamic” zero Covid policy and that all measures should be taken to prevent large-scale re-spread of the virus.
Her speech, published by state media, ended with a call to set the stage for a summit meeting of China’s ruling Communist Party later this year. Chinese President Xi Jinping is expected to receive an unprecedented third term at the meeting.
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Moving away from zero Covid “can now be taken as an admission that the strategy didn’t work at all,” Ting Lu, chief China economist at Nomura, said Friday.
“The next 12 months is a pivotal moment for a once-in-a-decade leadership change that forces top leaders to stick to the status quo to avoid policy missteps,” he said. “Photos of many Hong Kong Covid patients being treated outside crowded hospitals have further convinced Chinese officials and the masses that the ZCS is China’s only viable solution to fight the coronavirus.”
The Chinese Centers for Disease Control and Prevention published a study in November stating that shifting to a coexistence strategy with other countries is likely to lead to hundreds of thousands of new cases daily and destroy the nation’s medical system.
But according to Lu, the economic costs of a Covid zero spread strategy are rising while the benefits are diminishing.
“Amid lockdowns and travel bans across China,” he said, “more people are feeling out of sorts, tired, unemployed or underemployed, and draining their savings to the point where they have to cut spending.”