China Expands COVID Bans, iPhone Factory Unrest Adds to Economic Concerns

  • Covid restrictions increased as cases increased
  • iPhone factory unrest underscores industrial, social risks
  • Analysts warn of potential for wider lockdowns
  • The resort city of Sanya imposes restrictions on new arrivals

BEIJING, Nov 23 (Reuters) – Chinese cities imposed additional restrictions on Wednesday to curb rising coronavirus cases, raising investor concerns about the economy, as fresh unrest at the world’s largest iPhone plant highlighted China’s severe social and industrial toll of COVID. 19 activities.

In Beijing, malls and parks were closed and officials urged people to stay at home as once-bustling parts of the capital resembled ghost towns.

The Hainan island resort city of Sanya banned people from visiting restaurants and malls within three days of their arrival, and many cities across China have imposed localized lockdowns as infections near the peak seen in April.

The measures darken the outlook for the world’s second-largest economy and dampen hopes that China will significantly ease its external COVID stance anytime soon, as China spends its first winter battling the highly contagious Omicron variant.

“While there is little chance that authorities will back away from the zero-covid policy in winter, there is a significant risk that containment efforts will fail,” analysts at Capital Economics wrote.

Such a failure could cause unprecedented damage to the economy and further lockdowns, they said.

China’s Covid restrictions, among the strictest in the world, have caused widespread discontent among manufacturers including Taiwan’s Foxconn and disrupted production. (2317.TW)Apple Inc’s largest iPhone supplier.

On Wednesday, footage uploaded to social media showed Foxconn workers removing barricades, brawling with officials in hazmat suits and chanting “give us our wages”. The unrest followed weeks of turmoil when scores of workers left the factory due to Covid restrictions. Reuters could not immediately verify the videos.

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The regions, which account for nearly a fifth of China’s total GDP, are under some form of lockdown or restrictions, brokerage Nomura estimated earlier this week, more than Britain’s GDP.

Test solution

Although the number of infections is low by global standards, China is sticking to its zero-covid approach, a signature policy of President Xi Jinping that officials argue saves lives and prevents medical system overload.

China reported 28,883 new locally transmitted cases on Tuesday.

The International Monetary Fund urged China to further revamp its COVID-19 strategy and increase vaccination rates.

“While the zero-covid strategy has become dynamic over time, the combination of more contagious COVID variants and persistent gaps in vaccinations has led to the need for frequent lockdowns, weighing on consumption and private investment,” IMF official Geeta Gopinath said.

Residents are increasingly fed up with nearly three years of restrictions, and Wednesday’s protest at a Foxconn factory in Zhengzhou came after crowds in the southern city of Guangzhou recently broke barriers and clashed with hazmat-suited workers.

Rising case numbers are also testing China’s resolve to avoid one-size-fits-all measures, such as mass lockdowns, to contain outbreaks and instead rely on recently revised Covid rules.

However, unofficial lockdowns have increased, including in residential buildings and campuses in Beijing, where case numbers hit a new high on Tuesday.

In Shanghai, the city of 25 million that was locked down for two months earlier this year, China’s top auto association said on Wednesday it would cancel the second day of the China Auto Overseas Development Summit there over Covid concerns.

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Chengdu, with 428 cases on Tuesday, became the latest city to announce mass testing.

Major manufacturing hubs Chongqing and Guangzhou have continued to see high infection numbers, accounting for most of China’s caseload. Cases in Guangzhou fell to 7,970 on Tuesday and officials said infections continued to pile up in key areas of Haiju County.

Investors who had hoped China would ease restrictions last week have heightened concerns that a wave of infections could slow the reopening of the economy. Read More Several analysts say a significant easing of COVID restrictions is unlikely before March or April.

A sharper-than-expected slowdown in China, particularly affecting domestic demand, will reverberate in countries including Japan, South Korea and Australia, which export hundreds of billions of dollars worth of goods and services to the world’s second-largest economy.

Analysts are also cutting forecasts for oil demand from the world’s top crude importer, with recent Covid-19 restrictions already weighing on global oil futures.

“The next few weeks will be the worst in China after the initial weeks of the pandemic for both the economy and the health system,” analysts at Capital Economics said.

reporting by Beijing and Shanghai newsrooms; By Bernard Orr; Editing: Muralikumar Anantharaman, Miral Fahmi, Tony Munro and Bernadette Baum

Our Standards: Thomson Reuters Trust Principles.

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