China widens COVID curbs, iPhone factory unrest adds to economy worries

  • COVID restrictions have increased as cases have increased
  • The iPhone factory crisis highlights the business, social risks
  • Analysts are warning of the possibility of a wider ban
  • The resort town of Sanya places limits on movement for new arrivals

BEIJING, Nov 23 (Reuters) – Chinese cities imposed additional restrictions on Wednesday to deal with rising coronavirus cases, adding to investors’ worries about the economy, as a new outbreak at the world’s biggest iPhone maker highlighted the social and economic impact of the severe COVID-19 pandemic. of China – 19th century.

In Beijing, malls and parks were closed and bustling areas of the capital resembled ghost towns as authorities urged people to stay at home.

The city of Hainan on the island of Sanya has barred people from restaurants and supermarkets for three days, and several cities across China have imposed lockdowns as infections approach the highs seen in April.

The measures darken the outlook for the world’s second-largest economy and lower hopes that China will significantly ease its COVID-19 situation anytime soon, as China faces its first winter to battle the highly contagious Omicron strain.

“While there is little hope that the authorities will choose to withdraw from the zero-COVID policy during the winter, there is a high risk that containment efforts will fail,” Capital Economics analysts wrote.

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Such a failure could lead to further shutdowns that could cause unprecedented damage to the economy, they said.

China’s COVID measures, the strictest in the world, have fueled widespread discontent and disrupted production at manufacturers including Taiwan’s Foxconn ( 2317.TW ), Apple Inc’s biggest iPhone supplier.

On Wednesday, images uploaded to social media showed Foxconn workers lowering barriers and fighting with authorities in hazmat suits, chanting “give us our wages”. The unrest follows weeks of unrest that have seen many workers walk out of the factory due to the COVID-19 pandemic. The videos could not be immediately verified by Reuters.

Areas accounting for about one-fifth of China’s total GDP are under some form of ban or curbs, trader Nomura estimated earlier this week, a number that would exceed Britain’s GDP.


Although infection rates are low by world standards, China is sticking to its zero-COVID approach, a signature policy of President Xi Jinping that officials argue saves lives and prevents the medical system from being overwhelmed.

China reported 28,883 new domestic infections on Tuesday.

The International Monetary Fund has urged China to continue to update its COVID-19 strategy and increase vaccination rates.

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“Although the zero-COVID strategy has developed over time, the combination of more contagious forms of COVID and persistent gaps in vaccination has led to the need for frequent shutdowns, difficulties in implementation and private investment,” said IMF official Gita Gopinath.

Residents are increasingly frustrated by nearly three years of restrictions, and Wednesday’s protest at the Foxconn factory in Zhengzhou comes after crowds recently clashed with barriers and clashed with hazmat-suit-wearing workers in the southern city of Guangzhou.

The rising number of cases is testing China’s willingness to avoid one-size-fits-all measures such as mass lockdowns to contain the outbreak, and is relying on newly enacted COVID laws instead.

However, illegal foreclosures have increased, including in residential buildings and compounds in Beijing, where the number of cases peaked on Tuesday.

In Shanghai, a city of 25 million that was locked down for two months earlier this year, China’s main transport association said on Wednesday it would cancel the second day of the China Transport Development Summit held there due to COVID concerns.

Chengdu, which had 428 cases on Tuesday, became the latest city to announce more testing.

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The major industrial areas of Chongqing and Guangzhou have seen increasing numbers of infections, accounting for the majority of China’s caseload. Cases in Guangzhou fell slightly on Tuesday to 7,970 and authorities said infections continued to be concentrated in the central district of Haizhu.

Investors last week hoped that China would ease restrictions and worried that a wave of infections could slow the reopening of the economy. read more Many analysts say a significant reduction in the COVID curbs is unlikely before March or April.

A sharper-than-expected slowdown in China, which has hurt domestic demand in particular, will reverberate in countries including Japan, South Korea and Australia, which export hundreds of billions of dollars of goods and products to the second-largest economy.

Analysts are also cutting estimates for oil demand from exporters, with the latest COVID curbs already driving oil futures lower.

“The next few weeks could be China’s worst since the first weeks of the pandemic for the economy and the health system,” said analysts at Capital Economics.

Reporting for newsrooms in Beijing and Shanghai; By Bernard Orr; Editing by Muralikumar Anantharaman, Mural Fahmy, Tony Munroe and Bernadette Baum

Our standards: The Thomson Reuters Trust Principles.


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