China shuts down entire Shenzhen, Jilin Province as Covid swells

(Bloomberg) — China has put 17.5 million Shenzhen residents on lockdown for at least a week, prompting a major supplier to Apple Inc. to halt production at the biotech hub, and prevent people from leaving Jilin, the first time in an entire province that has been on lockdown since the dramatic shutdown of Wuhan and its surroundings in 2020.

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Shenzhen’s lockdown, which came after new virus cases nationwide doubled to nearly 3,400, will be accompanied by three rounds of citywide mass testing. The order was called without warning on Sunday, following previous restrictions on Shenzhen’s central business district, and will run through March 20.

All bus and subway systems in the city have been closed, and businesses except for those providing essential services have been closed. Staff were told to work from home if they could. Residents will be banned from leaving the city – home to the headquarters of tech giants Huawei Technologies Co. and Tencent Holdings Ltd. , as well as one of the busiest ports in China – except in limited cases. Shenzhen Yantian port is still in operation, despite tighter controls over Covid.

Hon Hai Precision Industry Co., Ltd. said: Ltd., a supplier to Apple, known as Foxconn, has halted operations at its Shenzhen locations, one of which makes iPhones. The company, which is headquartered in China in the city, did not specify the length of the shutdown, although it said it would reallocate production to other factories in the country.

Read more: Foxconn suspends iPhone Shenzhen website due to Covid shutdown

In Jilin, a province of 24 million people that borders Russia and North Korea in northeastern China, people have been asked not to leave or travel, particularly in the provincial capital Changchun and Jilin City, where the majority of infections have been found. . Changchun was already closed last week, forcing Toyota Motor Co. to suspend operation of its plant there.

The growing clusters generated by the highly contagious omicron variant in some of China’s most developed cities and economic regions have turned into an unprecedented challenge for the country’s Covid Zero strategy. The policy, which has given China long periods free of the virus and one of the lowest death rates in the world, is leaving the country increasingly isolated as other countries open up and coexist with the virus. So far, officials have largely resisted stricter measures such as lockdowns in China’s largest city and have relied more on targeted responses, only to see omicron continue to flare up. China has not had any deaths from the virus since January 2021.

Why China is sticking to the Covid Zero strategy: QuickTake

The surge in infections in Shenzhen is believed to be linked to the runaway outbreak in neighboring Hong Kong, which went from a handful of cases to more than 30,000 in about a month. The outbreak of COVID in Shanghai also saw most schools return to online learning and travel to the city restricted. Bus services from other provinces have been suspended over the weekend, and China’s aviation regulator is in discussions with airlines about diverting all international flights to the financial hub, Bloomberg News reported on Friday.

Umicron Technology Corp. also suspended. , a printed circuit board manufacturer operating in Shenzhen, Production. Auto and battery maker BYD said it sees some impact on production at its Shenzhen campus.

The Jilin lockdown is the first for an entire province since China locked down more than 50 million people in Hubei in early 2020 to stem the spread of the deadly coronavirus after it emerged in the provincial capital, Wuhan. Jilin is home to one of the largest mineral reserves in China and is a major agricultural area. Its industries are mainly concentrated around the grain, timber, automobile and railway sectors.

The China National Petroleum Corporation’s refinery in Jilin, for example, produces petrochemicals and plastics that are trucked to factories that make cars and other industrial parts. Any disruption to supply may cause delays along vehicle production lines.

Cases have emerged across China, with omicron also found in Beijing and in Tianjin, a nearby port city. A number of cities in Jiangsu Province, next to Shanghai, and in Guangdong Province, the country’s powerful manufacturing hub, have also reported infections.

Read more: China’s coronavirus lockdowns could threaten half of the economy

Jilin has the largest prevalence, with more than 1,000 cases in the community on Sunday and 3,868 people who had initially tested positive for Covid as of 12 noon on Monday.

Reminiscent of the early days of the epidemic in Wuhan, authorities are moving quickly to build temporary hospitals in Jilin and in the eastern port city of Qingdao. China is quarantining all cases of Covid, regardless of severity, as a way to stop the spread of the disease. A joint Toyota plant that makes the RAV4 SUV in Changchun suspended operations on Monday due to the shutdown.

Investors responded to the news, selling shares related to tourism and reopening China, while buying makers of rapid antigen test kits after China began allowing them for public use on Friday. Macau’s casinos index fell 10% to a record low, with the shutdown and the outbreak potentially restricting mainland gamblers, especially neighboring Guangdong province.

Covid Zero’s tactics led to disruption, with multiple rounds of mass testing in Tianjin in January halting production at another Toyota plant there for more than a week. Nomura Holdings Inc says this approach will make it difficult for Beijing to achieve its economic growth target in 2022, as the costs of the actions rise. However, China reiterated its commitment to Covid Zero on Friday, with senior health official Ma Xiaowei saying strict controls should remain in place and officials should avoid “war boredom” in their work.

As of March 9, 14 provinces in China have been declared high or medium risk for the virus, which accounts for 54.4% of GDP, according to Bloomberg Economics.

The outbreak of Covid in Hong Kong has posed an unprecedented challenge to Beijing, with tighter border controls in the city and quarantines for weeks that do not match Omicron once it enters the city. Thousands of people have left the Asian financial center to return to the mainland, with Shenzhen and Shanghai being the two busiest ports of entry.

Hong Kong’s health system and morgues have come under pressure from a record outbreak that has pushed the death rate to one of the highest in the world. While the number of virus cases in the city appears to have stabilized over the past week, the number of deaths has risen, especially among the elderly, who have had some of the lowest vaccination rates despite their extreme frailty.

Chief Executive Carrie Lam said the Hong Kong government was still making plans for mandatory testing of all of its residents, including the timing and how they would ensure essential operations could continue if movement restrictions were imposed. For now, authorities will focus on vaccinating older adults living in care facilities — which are seeing a rise in deaths — and increasing the number of hospital beds to treat patients, she said.

Read more: Hong Kong nursing homes are vulnerable to COVID-19

Also a supporter of Covid Zero, Hong Kong has set the limits of strategy with authorities scrambling once Omicron has passed tough border defences. There appears to have been little planning as to whether the virus has spread purposefully in the city, resulting in scenes eerily similar to those seen in the early days of the epidemic in parts of Italy and the United States. Hong Kong’s intensity and political climate make it difficult to lock in. down, and despite pressure from officials in Beijing, they have so far resisted summoning one.

Quick Tests

While China remains publicly committed to eliminating Covid, there are signs that the country’s health officials and experts are at least thinking about how to get out of this approach and live with the virus as a pandemic.

China has approved the Paxlovid antiviral pill developed by Pfizer Inc. last month, a move many saw as evidence of such planning. Friday’s introduction of rapid antigen tests may also be a sign, with other states shifting toward using the tests at home when their lab testing systems were overwhelmed by the virus’s wider spread.

However, any turnaround will be slow and unlikely before 2023, given the need to stabilize in a politically important year for President Xi Jinping, people familiar with China’s thinking told Bloomberg.

Zhang Wenhong, a top infectious disease expert in China who advises the Shanghai government, said in a social media post on Monday that although omicron is less virulent than other variants, China needs to stick with Covid Zero for now because opening up It will cause hospitalizations to continue and lead to excessive deaths.

He cited the “fairly high” number of elderly people with underlying diseases who had not yet been vaccinated due to concerns about the side effects of the doses. Zhang said there would be “unimaginable consequences” if the infection spread widely among them.

In the past, China has expressed concern about vaccination rates for the elderly in some regions. Although nearly 90% of the country’s 1.4 billion people have been fully vaccinated, they did not provide details of figures for specific age groups.

(Updates with the closing of Jilin Province from the first paragraph.)

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