China extends COVID curbs, iPhone factory unrest adds to economic worries

  • COVID restrictions have been tightened as cases have risen
  • The unrest at the iPhone factory underscores the industrial and social risks
  • Analysts warn of potential further lockdowns
  • The resort city of Sanya imposes movement restrictions on new arrivals

BEIJING, Nov 23 (Reuters) – Chinese cities on Wednesday imposed further curbs in a bid to stem rising coronavirus cases, adding to investor concerns about the economy as fresh unrest at the world’s largest iPhone factory is taking a social and industrial toll of China’s severe COVID-19. 19 measures.

In Beijing, malls and parks have been closed and once-busy areas of the capital have become ghost towns as authorities urged people to stay home.

The resort city of Sanya on Hainan Island banned people from visiting restaurants and malls within three days of arriving, and numerous cities across China have imposed local lockdowns as infections approached the highs seen in April.

The measures darken the outlook for the world’s second-largest economy and dampen hopes that China will ease its runaway-COVID stance significantly for the foreseeable future as China faces its first winter battling the highly contagious Omicron variant.

“While there is little prospect of authorities backing away from zero-COVID policies over the winter, there is a significant risk that containment efforts will fail,” wrote analysts at Capital Economics.

Such a failure could lead to more lockdowns that would wreak unprecedented damage on the economy, they said.

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

On Wednesday, footage uploaded to social media showed Foxconn employees breaking down barriers and fighting with authorities in hazmat suits, chanting “Give us our wages.” The unrest follows weeks of turmoil that have seen scores of workers leave the factory for COVID controls. The videos could not be immediately verified by Reuters.

Localities accounting for nearly a fifth of China’s total GDP are facing some form of lockdown or restrictions, real estate agent Nomura estimated earlier this week, a number that would exceed Britain’s GDP.


Though infection numbers are low by global standards, China has stuck to its zero-COVID approach, a signature policy by President Xi Jinping that officials argue saves lives and prevents the medical system from being overwhelmed.

China reported 28,883 new domestically transmitted cases for Tuesday.

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

“Although the zero-COVID strategy has become more nimble over time, the combination of more contagious COVID variants and ongoing vaccination gaps has resulted in the need for more frequent lockdowns, weighing on consumption and private investment,” said the IMF Official Gita Gopinath.

Residents are increasingly weary of nearly three years of restrictions, and Wednesday’s protest at the Foxconn factory in Zhengzhou comes after crowds recently tumbled through barriers and clashed with workers in hazmat suits in the southern city of Guangzhou.

The rising case numbers are also testing China’s resolve to avoid unified measures like mass lockdowns to contain outbreaks, relying instead on recently adjusted COVID rules.

However, unofficial lockdowns have increased, including in residential buildings and campuses in Beijing, where case numbers hit a new high on Tuesday.

In Shanghai, a city of 25 million that was under a two-month lockdown earlier this year, China’s top automobile association said on Wednesday it would cancel the second day of the China Automotive Overseas Development Summit being held there over COVID concerns.

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

The major manufacturing centers of Chongqing and Guangzhou have continued to experience high infection rates, which account for the majority of cases in China. Cases in Guangzhou fell slightly to 7,970 on Tuesday, and authorities said infections remain concentrated in key areas of Haizhu District.

Investors, who last week hoped China would ease restrictions, are concerned that the spate of infections could slow economic reopening. read more Many analysts say significant easing of COVID restrictions is unlikely before March or April.

A worse-than-expected slowdown in China, particularly affecting domestic demand, would impact countries like Japan, South Korea and Australia, which export hundreds of billions of dollars worth of products and commodities to the world’s second largest economy.

Analysts are also trimming oil demand forecasts for the world’s top crude oil importer, with recent COVID restrictions already driving global oil futures lower.

“The next few weeks could be the worst in China since the first few weeks of the pandemic, both for the economy and the healthcare system,” said analysts at Capital Economics.

Coverage of newsrooms in Beijing and Shanghai; writing by Bernard Orr; Edited by Muralikumar Anantharaman, Miral Fahmy, Tony Munroe and Bernadette Baum

Our standards: The Thomson Reuters Trust Principles.

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