China said on Friday it would help hundreds of companies in key sectors resume production in shuttered Shanghai, the commercial capital at the center of the country’s latest Covid-19 outbreak, as companies warn of rising cost. economics of restrictions.
The announcement comes as a growing number of business leaders and analysts are warning that China’s strict “zero Covid” policy is triggering economic disruptions that ripple through global supply chains, from goods from electric vehicles to iPhones.
The Ministry of Industry and Information Technology will work with 666 companies making semiconductors, automobiles and the medical sector to get back to work, it said in a statement on Friday.
Teams have been sent to Shanghai to ensure work resumes at these major industrial companies, the regulator added.
Electric car maker Xpeng 9868.HK and tech giant Huawei HWT.UL have warned of industry-wide production suspensions if suppliers in Shanghai and surrounding areas are unable to resume work, while several foreign companies recently announced shutdowns. production in its Chinese factories. Read full story
Airlines and real estate are also feeling the pain.
While Shanghai’s 23,000 new infections on Friday were down from more than 27,000 the day before, they included a record 3,200 symptomatic cases, down from 2,573 the day before.
Xpeng Chief Executive He Xiaopeng has issued a dire warning for the industry unless the situation improves.
“If suppliers in and around Shanghai can’t find a way to resume operations and production, by May, possibly all automakers in China will have to stop production,” he said on the social media app Wechat.
Richard Yu, chief executive of Huawei’s consumer business group and its smart car unit, echoed He’s sentiments in private comments confirmed by the company, adding that the industry has faced heavy losses.
Shipments of some Apple products as well as Dell and Lenovo laptops could also face delays, analysts said.
On Friday, the Transport Ministry announced a national pass system to allow freight vehicles to move between higher-risk zones without delay — as long as drivers have normal temperatures and a negative virus test no more than 48 hours.
An April 7 study by Gavekal Dragonomics found that 87 of China’s 100 largest cities by gross domestic product imposed some form of quarantine restrictions.
Covid restrictions also hit travel across the country, with air carrier Air China 601111.SS reporting a 70% drop in March traffic from a year ago.
Home prices stagnated for a second straight month in China’s top 70 cities last month, official data showed on Friday, as the lockdowns sapped consumer confidence and sapped demand.
Some of the citizens stranded in Shanghai expressed frustration on social media with the difficulties in getting food and poor conditions at the central quarantine facilities.
Most of Shanghai’s stores were closed, except a few with the shutters half-open, from which goods were being transported to waiting delivery drivers.
The city has converted residential buildings into quarantine centers, but that is sparking protests from angry neighbors worried about increased risks of infection.
Source: CNN Brasil
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