Covid lockdown extended in Shanghai as outbreaks put economy on the skids
Shanghai has been plunged into an extended lockdown and some residents face another 10 days of isolation in their homes as China’s strict zero-Covid policy threatens to derail the country’s economy.
The eastern half of China’s biggest city had been due to emerge on Friday from a four-day lockdown aimed at crushing a persistent outbreak of the Omicron variant, but the extension was announced late on Thursday night.
A lockdown of the western half of the city went ahead as planned on Friday morning, leaving a majority of the city’s 26 million people still in lockdown in the latest sign that China’s financial powerhouse is struggling to eliminate the outbreak.
The virus has forced lockdowns in several large cities this year, making the current outbreak the country’s worst since the pandemic started in Wuhan in 2019 and threatening to derail the world’s second-largest economy.
Figures released on Friday showed that factory activity in China slumped at the fastest pace in two years in March, as the resurgence of Covid and the economic fallout from the Ukraine war triggered sharp falls in production and demand.
A closely watched measure of output – the Caixin/Markit manufacturing purchasing managers’ index (PMI) – fell from 50.4 in February to 48.1 in March, indicating the steepest rate of contraction since February 2020.
Economists at Morgan Stanley cut China’s economic growth forecast for this year sharply, while Citigroup warned of risks to the second-quarter outlook.
Trinh Nguyen, senior economist at Natixis in Hong Kong, said China’s zeroCovid policy was now the biggest risk to the Chinese economy and predicted worse was still to come.
“April is going to be horrible with the Shanghai lockdown extended,” she said. “And this will reverberate regionally and globally as it impacts both demand and supply.”
The German carmaker BMW has closed its plants in Shenyang, a northeastern city in Liaoning province, because of pandemic controls.
The slowdown in China’s economy has also caused the price of oil to fall as markets bet that the world’s number two economy will not require as much fuel.
Bill Bishop, the respected China observer, said on Friday that concern about the outbreak in Shanghai had been heightened by reports in the Wall Street Journal that there had been deaths at a care facility in the city.
“The outbreak in Shanghai is getting worse, it looks likely lockdowns will be tightened and extended …” he wrote in his weekly newsletter, Sinocism.
“The case number data from Shanghai already look a little strange, if the officials are also covering up deaths then this could get really bad.”
The city said on Friday morning that it had recorded 4,144 asymptomatic cases and 358 symptomatic cases on Thursday, compared with 5,298 and 355 the previous day.
The changes to the rules in Shanghai mean that anyone living in a building where a positive case has been found will be required to stay home for 10 more days. Residents of other buildings in the same residential compound will be confined for three more days.
People living in the surrounding neighbourhood of a positive case will face less restrictive limits. They may be allowed out to shop for necessities, but only for a limited time on certain days.
About 16 million people will be tested during the lockdown in Puxi on the west side of the river in Shanghai. Residents are not allowed to leave their neighbourhoods or housing compounds during the four-day period, with groceries or meals delivered to their complexes.
Ma Chunlei, a senior Shanghai official, acknowledged shortcomings in the city’s response. Authorities have rushed to bolster food deliveries to the city after panic buying stripped store shelves of necessities.
“We didn’t prepare sufficiently enough,” Ma said. “We sincerely accept the criticisms from the public and are making efforts to improve it.”
There was some good news elsewhere in China when authorities announced the lifting of a citywide lockdown in the province that has been hardest hit.
Authorities in Jilin reportedly issued a notice saying that residents would be able to move about freely from Friday for the first time in more than three weeks. They will be required to wear masks and, when indoors, stay 1 meter (3 feet) apart. Public gatherings in parks and squares are prohibited.The spread of Covid-19 has been brought under control in Jilin but not in the rest of Jilin province, officials said at a news conference. Some progress has been made in Changchun, the provincial capital and an auto manufacturing hub that has been locked down since 11 March.
By far, most of the cases in the ongoing outbreak have been in Jilin province, which borders North Korea in China’s industrial northeast.
China on Thursday reported 8,559 new cases in the previous 24-hour period, of which 6,720 had no symptoms. The proportion of asymptomatic cases has been higher than in previous outbreaks, particularly in Shanghai. About 100 of the new cases were imported ones among people who had recently arrived from abroad.