China widens COVID curbs, Apple factory unrest adds to economy worries

  • COVID restrictions increase as cases rise
  • iPhone factory unrest heightens economic concerns, underlines frustration
  • Analysts warn of the potential for wider lockdowns

BEIJING, Nov 23 (Reuters) – Chinese cities imposed more restrictions on Wednesday to contain rising coronavirus cases, heightening investor worries about the economy as fresh unrest at the world’s biggest iPhone factory highlighted the social and industrial damage from China’s strict COVID-19 measures.

In Beijing, malls and parks were closed and once-bustling areas of the capital resembled ghost towns as authorities urged people to stay at home. Shanghai banned recent arrivals from restaurants and other places, and many cities imposed local lockdowns as infections approached peaks seen in April.

The measures darken the outlook for the world’s second-largest economy and dampen hopes that China will soon ease its COVID emergency policies significantly.

“While there is little prospect that the authorities will decide to withdraw from the zero COVID policy in winter, there is a significant risk that containment efforts will fail,” wrote analysts at Capital Economics. Such a failure could lead to more shutdowns, which would cause unprecedented damage to the economy, analysts added.

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China’s COVID restrictions, the strictest in the world, have fueled widespread discontent and disrupted production at manufacturers including Taiwan’s Foxconn ( 2317.TW ), Apple Inc’s biggest iPhone supplier.

On Wednesday, scenes uploaded to social media showed Foxconn workers tearing down barriers and fighting authorities in protective suits, chanting “give us our pay”. The unrest follows weeks of unrest that prompted dozens of workers to walk out of the factory over COVID controls.

Places that make up almost a fifth of China’s total GDP are under some form of lockdown or restrictions, brokerage Nomura estimated earlier this week, a figure that would exceed the GDP of the British economy.

TESTING PERMIT

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 say is saving lives and preventing the medical system from being overwhelmed. As of Tuesday, there were 28,883 new cases of domestic transmission, official data showed.

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

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“Although the Zero COVID strategy has become more nimble over time, the combination of more contagious variants of COVID and persistent vaccination gaps have led to the need for more frequent lockdowns, weighing on consumption and private investment,” the official said. IMF Gita Gopinath.

Residents are increasingly fed up with nearly three years of restrictions, and Wednesday’s protest at Foxconn’s Zhengzhou factory comes weeks after crowds pushed through barriers and clashed with workers wearing protective suits in the southern city of Guangzhou.

The rising number of cases is also testing China’s resolve to eschew one-size-fits-all measures such as mass lockdowns to contain outbreaks and instead rely on recently amended COVID rules.

However, unofficial lockdowns have increased, including in apartment buildings and complexes in Beijing, where the number of cases reached a new high on Tuesday.

In Shanghai, a city of 25 million that was locked down for two months earlier this year, China’s leading automobile association said on Wednesday it would cancel the second day of a summit on China’s overseas auto development, which is being held there due to concerns about COVID.

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

The major manufacturing hubs of Chongqing and Guangzhou have seen consistently high numbers of infections, accounting for the majority of cases in China. Cases in Guangzhou fell slightly on Tuesday to 7,970, and authorities said infections remained concentrated in key areas of Haiju province.

Investors who had hoped last week that China would soon ease restrictions have worried that the latest wave of contagion could slow the reopening of the economy. read more Many analysts say a significant reopening is unlikely before March or April.

“The next few weeks could be China’s worst since the early weeks of the pandemic for both the economy and the health system,” said analysts at Capital Economics.

Reports from Beijing and Shanghai newsrooms; Written by Bernard Orr; Editing by Muralikumar Anantharaman, Miral Fahmy and Tony Munroe

Our standards: The Thomson Reuters Trust Principles.

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