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

  • As the number of cases increased, the COVID restrictions were tightened
  • Unrest at the iPhone factory shows industrial and social risks
  • Experts warn that the blockades may expand
  • The resort town of Sanya imposes movement restrictions on newcomers

BEIJING, Nov 23 (Reuters) – Chinese cities on Wednesday imposed additional restrictions to curb a growing number of coronavirus cases, raising investor concerns about the economy as fresh unrest at the world’s largest iPhone factory highlighted the social and industrial toll of severe COVID-19 in China. 19 events.

In Beijing, shopping malls and parks were closed and once-bustling areas of the capital resembled ghost towns as authorities urged people to stay indoors.

The resort city of Sanya on Hainan Island banned people from restaurants and shopping malls within three days of their arrival, while many Chinese cities imposed local lockdowns as infections peaked in April.

The measures darken the outlook for the world’s second-largest economy and dampen hopes that China will soon ease its COVID situation significantly as China grapples with the highly contagious Omicron variant in its first winter.

“While the authorities have little hope of abandoning the zero-covid policy during the winter, there is a risk that containment efforts will fail,” analysts at Capital Economics wrote.

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Such a failure could lead to unprecedented economic shutdowns, they say.

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

Footage uploaded to social media on Wednesday showed Foxconn workers breaking barriers, fighting authorities in hammat suits and chanting “give us our wages”. The unrest followed weeks of turmoil in which many workers left the plant due to COVID-19 controls. Reuters could not immediately confirm the footage.

The settlements account for nearly a fifth of China’s total GDP under some form of lockdown or restriction, brokerage Nomura estimated earlier this week, a figure that exceeds Britain’s GDP.

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

China reported 28,883 new cases on Tuesday.

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

“While the zero-covid strategy has become more flexible over time, the combination of more infectious variants of COVID and persistent gaps in vaccinations has led to the need for frequent lockdowns, taking into account consumption and private investment,” said Gita Gopinath of the IMF.

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Residents have grown weary of nearly three years of restrictions, and protests erupted at the Foxconn factory in Zhengzhou on Wednesday, after crowds recently stormed barricades and clashed with masked workers in the southern city of Guangzhou.

The rising number of cases is testing China’s decision to avoid one-size-fits-all measures to contain the outbreak, such as a mass lockdown, and instead rely on recently amended COVID rules.

However, informal lockdowns have increased, including in residences and compounds in Beijing, with the number of cases reaching a new high on Tuesday.

In Shanghai, a city of 25 million people that shut down for two months earlier this year, China’s top auto association said on Wednesday it was canceling the second day of the China Overseas Automotive Development Summit there because of COVID.

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

Major manufacturing centers in Chongqing and Guangzhou, which account for most of China’s cargo, have seen high numbers of infections. Cases in Guangzhou fell slightly to 7,970 on Tuesday, and authorities said infections were concentrated in the core areas of Haizhou District.

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Investors who had hoped China would ease restrictions last week worried that a wave of infections could slow the reopening of the economy. more Many experts say a significant easing of COVID restrictions in March or April is unlikely.

A sharper-than-expected slowdown in China, which would hurt domestic demand in particular, would affect countries including Japan, South Korea and Australia, which export hundreds of billions of dollars worth of products and goods to the world’s second-largest economy.

Analysts are also cutting forecasts for oil demand from the world’s top oil importer, with recent COVID restrictions pushing global oil futures lower.

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

Beijing and Shanghai newsroom reporting; Written by Bernard Orr; Edited by Muralikumar Anantharaman, Miral Fahmi, Tony Munro and Bernadette Baum.

Our standards: Thomson Reuters Trust Principles.

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