China Locks Down Shenzhen, Entire Jilin Province as Covid Swells

(Bloomberg) – China placed 17.5 million residents of the southern city of Shenzhen into lockdown for at least a week, spurring a key Apple Inc. supplier to halt production in the vital technology hub, and forbid people from leaving Jilin, the first time an entire province has been sealed off since the dramatic lockdown of Wuhan and broader Hubei in 2020.

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The Shenzhen lockdown, which came after virus cases doubled nationwide to nearly 3,400, will be accompanied by three rounds of city-wide, mass testing. Called with little notice on Sunday, the order followed earlier restrictions placed on Shenzhen’s central business district, and will last until March 20.

In northeastern Jilin, a province of 24 million that borders Russia and North Korea, people have been asked not to leave or travel, particularly those in the provincial capital of Changchun and the eponymous city of Jilin, where the majority of the province’s infections have been found. Changchun, a city of some 9 million, had already come under lockdown last week, forcing Toyota Motor Corp. to suspend the operation of its plant there.

In Shenzhen, all bus and subway systems were shut down, and businesses, except those providing essential services, have been closed. Employees were told to work from home if they can. Residents will be barred from leaving the city – home to the headquarters of tech giants Huawei Technologies Co. and Tencent Holdings Ltd., as well as one of China’s busiest ports – except in limited situations. Shenzhen Yantian Port remains operational, though 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 HQ in Shenzhen, did not specify the length of the shutdown, though said it would reallocate production to other plants in the country. Chipmaker Umicron Technology Corp. also suspended output.

Read more: Foxconn Halts IPhone Shenzhen Site Due to Covid Lockdown

The surge in infections in Shenzhen is thought to be linked to an unbridled outbreak in neighboring Hong Kong, which went from a handful of cases to more than 30,000 in about a month. A Covid flareup in Shanghai has also seen most schools returned to online learning and travel into the city restricted. Bus services from other provinces were halted at the weekend, and China’s aviation regulator is in discussions with airlines about diverting all international flights into the financial center, Bloomberg News reported Friday.

Read more: China Looking to Divert Flights From Shanghai as Covid Surges

The sealing of Jilin is the first entire provincial lockdown after China shut down more than 50 million people in Hubei in early 2020 to quash the coronavirus’s deadly spread following its emergence in provincial capital Wuhan. Jilin is home to one of China’s largest mineral reserves and is a key agricultural area. Its industries are mainly concentrated around the grain, timber, automobiles and railways sectors.

China National Petroleum Corp.’s refinery in Jilin, for example, produces petrochemicals and plastics that are sent by truck to factories making automobiles and other industrial parts. Any supply snarl could mean knock-on delays along car production lines.

The growing clusters spawned by the highly infectious omicron variant in China’s most developed large cities and economic zones have turned into an unprecedented challenge for the country’s Covid Zero strategy.

The policy, which gave China long periods virus free and one of the lowest death rates among major economies, is leaving the country increasingly isolated as other parts of the world open up and live with the virus.

Until now, officials had largely resisted more hardcore measures such as lockdowns in China’s biggest cities and relied more on targeted responses, only to see omicron continue to spread. China quarantines all Covid cases, regardless of severity, as a way of halting spread.

Why China Is Sticking With Its Covid Zero Strategy: QuickTake

Investors reacted to the news, selling shares related to tourism and China’s reopening, while buying rapid-antigen test kit makers after China started allowing them for general use on Friday. An index of Macau casinos slumped as much as 10% to a record low, with the lockdown and outbreaks likely to limit gamblers from the mainland, especially neighboring Guangdong.

Cases are popping up through out China, with omicron also in Beijing and in Tianjin, a coastal city nearby. A number of cities in Jiangsu province, next to Shanghai, and in the country’s manufacturing powerhouse, Guangdong province, have also reported infections.

The worst outbreak is in Jilin, which reported more than 1,000 cases in the community for Sunday and said 3,868 people preliminarily tested positive for Covid as of 12 pm Monday.

Reminiscent of the early days of the pandemic in Wuhan, authorities are moving quickly to build makeshift hospitals in Jilin and in the eastern port city of Qingdao. A Toyota joint venture plant that makes RAV4 SUVs in Changchun suspended operations on Monday given the lockdown, Nikkei reported, citing the company.

Covid Zero tactics have led to disruption in other cities, with multiple rounds of mass testing in Tianjin in January halting production at another Toyota plant there for more than a week. The approach will make it harder for Beijing to hit its economic growth target in 2022, as the costs of the measures rise, Nomura Holdings Inc. says. Still, China reiterated its commitment to Covid Zero on Friday, with top health official Ma Xiaowei saying strict controls needed to be kept in place and that officials should avoid “war-weariness” in their work.

As of March 9, 14 of China’s provinces had been declared high or medium-risk for the virus, accounting for 54.4% of gross domestic product, according to Bloomberg Economics.

CHINA INSIGHT: 54.4% of GDP Affected by Virus Flags Growth Risks

The Covid surge in Hong Kong has provided an unprecedented challenge to Beijing, with the city’s tight border controls and weeks-long quarantines no match for omicron once it entered the city. Thousands of people left the Asian financial hub to return to the mainland, with Shenzhen and Shanghai some of the busiest entry ports.

Hong Kong’s health system and morgues have been under pressure from the record outbreak that’s pushed its death rate to one of the highest in the world. While the virus case count in the city appears to have plateaued over the past week, fatalities have risen, especially among the elderly, which had some of the lowest vaccination rates despite their greater vulnerability.

The Hong Kong government is still formulating plans for the mandatory testing of all its residents, including timing and how they’ll ensure essential operations can continue if movement restrictions were to be imposed, Chief Executive Carrie Lam has said. For now, authorities will focus on vaccinating older people living at care facilities – which are seeing a surge in fatalities – and increase the number of hospital beds to treat patients, she has said.

Read more: Hong Kong’s Nursing Homes Are Unvaccinated Hotbeds of Covid

Also an adherent of Covid Zero, Hong Kong has laid the limits of the strategy bare with authorities scrambling once omicron got through the tough border defenses. There seems to have been little planning for if the virus flared meaningfully in the city, resulting in scenes eerily similar to those seen in the early days of the pandemic in parts of Italy and the US Hong Kong’s density and political climate makes it difficult to lock down, and despite pressure from Beijing officials have so far resisted calling one.

Rapid Tests

While China is publicly still committed to eliminating Covid, there are signs the country’s health officials and experts are at least considering how they may exit the approach and live with the virus as endemic.

China approved the antiviral pill Paxlovid developed by Pfizer Inc. last month, a move seen by many as evidence of that planning. The introduction of rapid antigen tests on Friday may also be a sign, with other countries shifting toward use of at-home tests when their lab testing systems were overwhelmed by broader circulation of the virus.

That said, any shift will be slow and unlikely to occur before 2023, given the need for stability in a politically important year for President Xi Jinping, people familiar with China’s thinking have told Bloomberg.

Zhang Wenhong, one of China’s top infectious disease experts who advises the Shanghai government, said in a social media post Monday that despite omicron being less virulent than other variants, China needs to stick to Covid Zero for now as opening up would cause a run on hospitals and lead to excessive deaths.

He pointed out the “fairly high” number of elderly people and those with underlying diseases still not yet vaccinated because of concerns about side-effects from the shots. There would be “inconceivable consequences” should infections spread widely among them, Zhang said.

China has in the past voiced concern about elderly vaccination rates in some areas. Though nearly 90% of the country’s 1.4 billion people have been fully inoculated, they’ve not provided details on the figures for specific age groups.

(Updates with Jilin province lockdown from first paragraph.)

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