Shenzhen China’s Silicon Valley orders production to halt control of Covid

People wait in line for DNA samples in Shanghai, China, March 12, 2022.

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BEIJING – Mainland China faces the worst outbreak of Covid-19 since the country tightened its grip on the pandemic in 2020, as major cities rush to limit business activity.

Shenzhen, the largest city in the manufacturing center of Guangdong Province, has informed all companies that do not engage in basic public services with production suspension Or have employees work from home for a week starting Monday. It was said that stopping production includes an Apple the supplier FoxconnThat did not immediately respond to CNBC’s request for comment.

The city, sometimes called “Silicon Valley” in China, has closed public transportation and begun a third round of citywide testing. Shenzhen has reported more than 400 confirmed cases since late February.

These numbers and case counts across China pale in comparison to other countries. But the rapid increase in cases in the past few days has prompted local authorities to rush to control the outbreak as China seeks to maintain its Covid-free strategy.

Shanghai, the coastal capital home to many foreign companies and financial firms in China, has turned schools into online classes. Some neighborhoods have gone into lockdown and conducted mass testing, and residents usually cannot leave until results come back negative.

On Saturday, the city asked residents not to leave Shanghai unless absolutely necessary. More than 600 confirmed cases have been found since late February.

The Jilin province in northern China reported an overnight increase last weekend in more than 1,000 locally transmitted cases of the new coronavirus, bringing the total to more than 2,900 this month as of Sunday.

In all, mainland China reported 1,437 new confirmed cases as of Sunday – with only 100 attributed to travelers from overseas – for a total of 8,531 active locally transmitted cases. This is the largest number since March 2020. No new deaths have been reported.

Hong Kong, a special administrative region across the border from Shenzhen, has battled a resurgence of Covid cases in the past few weeks. The region has the world’s highest number of new Covid-related deaths per million people, according to Our World in Data.

The outbreak in Hong Kong stems from a highly transmissible omicron variant, which has since spread to the mainland.

Beijing city on alert

The capital, Beijing, said Sunday that it had identified six sources of transmission of the latest number of municipal cases, most of which were reported around the city center and eastern parts of the city. Local authorities have said that anyone returning to Beijing must not attend gatherings for seven days after arrival.

For several months, the capital had one of the country’s strictest COVID-19 control policies in place. Travelers must show 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 an area with a confirmed case, they will not be allowed into the city.

After Covid-19 emerged 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 weeks, but Covid has spread abroad in a global pandemic.

As of Monday, South Korea followed by Germany had the highest number of new cases in 28 days at 5.2 million and 4.8 million, respectively, according to Johns Hopkins data. The United States has recorded the highest number of deaths, at more than 967,000 as of Monday morning Beijing time.

Zero-Covid will not disappear

Mainland China has maintained a strict “no-COVID” policy for the past two years. Travel restrictions and the potential for rapid shutdowns have affected domestic tourism and service businesses, resulting in lower consumer spending.

The annual parliamentary meeting that concluded on Friday gave no indication that the central government was planning to ease its policy to control the Covid virus, although official statements in recent months have added terms such as “dynamic”.

Deputy Prime Minister Sun Chunlan said at a government epidemic control meeting on Saturday that the country should continue to follow the “dynamic” policy of no-spreading of the COVID-19 virus, and that all measures should be taken to prevent a large-scale re-emergence of the virus.

Her remarks, reported by state media, ended with a call to pave the way for a grand meeting of the ruling Chinese Communist Party later this year. Chinese President Xi Jinping is expected to receive an unprecedented third term at the meeting.

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Ditching Zero Covid “may now be seen as an acknowledgment that the strategy didn’t work in the first place,” Nomura chief China economist Ting Lu said in a note on Friday.

“The next 12 months is a critical period for a leadership change once a decade, which is what drives senior leaders to stick to the status quo to avoid making policy mistakes,” he said. “Photos of several Covid patients in Hong Kong treated outside overcrowded hospitals have convinced Chinese officials and the public that ZCS is China’s only viable solution to the coronavirus.”

The Chinese Center for Disease Control and Prevention published a study in November He said switching to a coexistence strategy in other countries would likely lead to hundreds of thousands of new daily cases and destroy the national medical system.

But, Lu said, the economic costs of the zero-Covid strategy are rising, while the benefits are dwindling.

He said, “Amid rounds of lockdowns and travel bans across China, more and more people are feeling tired, exhausted, out of work or out of work and have drained their savings to the level where they have to cut spending.”

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