China’s southern economic hub of Shenzhen began a coronavirus lockdown on Monday, jeopardizing major foreign business operations and trapping some 24 million residents inside the surrounding province. The industrial hub city of Changchun locked down on Friday, trapping 9 million citizens inside their homes and halting most corporate activity.
Bloomberg News noted the Shenzhen lockdown was announced “with little notice” on Sunday, and is scheduled to last until at least March 20. The impact on major business operations in “China’s Silicon Valley” will be devastating:
All bus and subway systems in the city were shut, along with businesses providing non-essential services, spurring a key Apple Inc. supplier to halt production. Residents will be barred from leaving the city, which is home to the headquarters of tech giants Huawei Technologies Co. and Tencent Holdings Ltd. Shenzhen Yantian Port remains operational, albeit with tighter Covid controls.
Apple supplier Hon Hai Precision Industry Co., known as Foxconn, said it was halting operations at its Shenzhen sites, one of which makes iPhones. The company, which has its China headquarters in the city, didn’t specify the length of the shutdown and said it would reallocate production to other plants in the country.
Shares of Foxconn, which is based in Taiwan, dropped in the Hong Kong stock exchange on Monday as the company announced it has “adjusted” its production lines to “minimize” the impact of the Shenzhen lockdown, without explaining precisely how its other facilities will be able to cover the productivity lost from Shenzhen.
In fact, almost every company based in Shenzhen took a beating of 7 to 10 percent in the stock market on Monday, and investors grew nervous about the impact of Shenzhen shutting down its enormous container port on already-stressed international supply chains.
A four-week lockdown of one port in Shenzhen last summer created a shipping backlog that did not clear up for months — arguably a more severe distortion of global shipping than the headline-grabbing blockage of the Suez Canal in March 2021.
With due recognition that nothing China says about the Wuhan coronavirus should be taken at face value, including its dubious claims of extremely low case numbers and fatalities, Reuters observed that the Communist government has now admitted to more infections in the first three months of 2022 than in the entirety of 2021:
Mainland China reported 1,337 new domestically transmitted COVID infections with confirmed symptoms on March 13, the National Health Commission (NHC) said on Monday. That brought the registered total this year to more than 9,000, compared with 8,378 in 2021, according to Reuters calculations.
Over 30% of the 2022 cases were found in the northeastern province of Jilin, which is scrambling to rein in the fast spread of the Omicron BA.2 sub-variant of the coronavirus.
[…] In the past week, new COVID cases have been reported in Beijing and the financial hub Shanghai – China’s most populous cities – as well as in the provinces of Guangdong, Jiangsu, Shandong and Zhejiang along the coast.
While the number of infections is small compared with caseloads elsewhere in the world, the rapid rate of increase has activated China’s dynamic zero COVID policy, which mandates that infections be quickly identified and contained.
Toyota on Monday announced the suspension of operations at its plant in Changchun, which was locked down on Friday. The Changchun plant is crucial to production of the Rav4, Toyota’s hugely popular small sport utility vehicle.
“Toyota in January suspended operations at a joint venture plant in Tianjin after the omicron variant of the coronavirus was discovered in the Chinese city. The company’s new car unit sales dropped about 20% in January from the year before in the wake of that, marking their first year-on-year decline in two months,” Nikkei Asia recalled.
Chinese state media said over the weekend that two mayors in Jilin and Changchun have been dismissed from their posts, presumably because they failed to control their coronavirus outbreaks adequately, although the exact reasons for their firings were not reported.
The South China Morning Post (SCMP) said Beijing remains committed to its “dynamic zero-Covid” strategy, even as major cities are locked down, industries are paralyzed, and the global supply chain threatens to break down over a handful of reported coronavirus infections. Even the current “surge” supposedly amounts to only 10,000 infections nationwide since the beginning of March. The Shenzhen lockdown was triggered by 66 new cases reported on Sunday, bringing the city’s total since February to a little over 400.
As the SCMP pointed out, China does not count asymptomatic cases, so even before Communist Party officials have a chance to cook the books, China’s case numbers are dramatically lower than those in any other nation in the world.
“It took only 11 days to go from 119 daily cases on March 1 to 3,122 cases on March 12. And this happened under strict nationwide active surveillance and prevention of the coronavirus,” complained Zhang Wenhong, a Shanghai epidemiologist quoted by the SCMP.
Virologist Jin Dong-yan of the University of Hong Kong suggested the notorious Omicron variant of Covid-19 spreads too quickly for China’s “dynamic zero-Covid” strategy to keep up with it.
“For example in Jilin, it was detected very late. It had already spread to many different places before they detected the first case. So the first case was not the first case. It may be the 1,000th or 10,000th case because it has already spread,” Jin said.
Hong Kong, which is adjacent to Shenzhen, has been grappling with a vastly higher coronavirus caseload than any other Chinese city will admit to. The semi-autonomous city has taken strict measures to combat the outbreak, but has resisted imposing a citywide lockdown, as Reuters reported.
The SCMP reported the latest numbers out of Hong Kong on Monday:
A total of 14,868 cases were logged through a new online government portal by residents using at-home rapid antigen tests, in addition to 12,040 confirmed through polymerase chain reaction screenings, bringing the daily total to 26,908.
Hong Kong’s overall Covid-19 tally stood at 733,785, including 721,154 cases logged during the fifth wave, or 98 per cent of the total.
Meanwhile, the Hospital Authority reported a record 249 coronavirus-related fatalities in the past 24 hours, involving patients aged between 39 and 105. Of those, 165 had no vaccination records, 41 had received one dose, 39 had two and four had three.
Another 37 people, aged 64 to 106, died earlier but were only reported on Monday due to a backlog. The number of Covid-related fatalities stood at 4,279.
Hong Kong health officials believe the Omicron wave, which began in December, has “plateaued” and should begin to recede within three to six weeks. One model of the outbreak predicted that by the end of May, almost 5 million of Hong Kong’s 7.4 million residents will have been infected.
Reuters on Monday reported mainland Chinese social media is boiling with anger against Hong Kong, which the mainlanders blame for infecting neighboring Shenzhen.
“Shenzhen people have been scolding Hong Kong every day for the past month. It’s very clear that it has caused so much trouble for others,” said one such social media post.
An unspoken factor in China’s Omicron outbreak — which no mainland scientist would mention and only a few of the braver Hong Kong doctors would allude to — is the weakness of China’s coronavirus vaccines.
Chinese Communist scientists made some bold claims for the quality of their vaccines, but in practice they proved less effective than American and British products against the earlier coronavirus types, and far less effective against Omicron. Chinese officials boasted of achieving very high vaccination rates after a rocky start to their inoculation program, but seem to have underestimated how Covid-19 can spread among vaccinated populations, especially Omicron.
Indonesia, which relies heavily on Chinese vaccines, went through a massive spike in cases last month, posting daily totals higher than 2021. The Indonesian wave appeared to begin receding last week, although its case numbers are still elevated.
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