Shanghai reports slight drop in COVID cases as economic impact bites

Volunteers in protective suits prepare to disinfect a residential compound in Huangpu district, to curb the spread of the coronavirus disease (COVID-19), in Shanghai, China April 14, 2022. China Daily via REUTERS

SHANGHAI — Shanghai posted a slight decline in new infections on Friday as the lockdown in the commercial capital at the center of China’s COVID-19 outbreak, coupled with curbs elsewhere, threatens to take a heavier toll on the world’s second-biggest economy.

China’s efforts to stop the virus with a strict “zero-COVID” policy are triggering economic disruptions that are rippling through global supply chains for goods from electric vehicles to iPhones.

Electric-car maker Xpeng and technology giant Huawei warned of looming industry-wide suspensions of output suspensions if suppliers in Shanghai and its environs cannot resume work.

Airlines and the property sector are also feeling the pain.

Although Shanghai’s 23,000 infections on Friday were down from more than 27,000 the previous day, they included a record 3,200 symptomatic cases, versus 2,573 a day earlier.

Xpeng’s Chief Executive He Xiaopeng issued a dire warning for the sector unless the situation improved.

“If the suppliers in Shanghai and its surrounding areas can’t find a way to resume operations and production, in May possibly all of China’s carmakers will have to stop production,” he said on the Wechat social media app.

Richard Yu, chief executive of both Huawei’s consumer business group and its smart car unit, mirrored He’s sentiments in private comments confirmed by the company, adding that the industry faced huge losses.

Shipments of some Apple products, as well as Dell and Lenovo laptops could also face delays, analysts said.

On Friday the transport ministry announced a national pass system to let cargo vehicles move between higher risk zones without delays, as long as drivers have normal temperatures and a negative virus test no older than 48 hours.

An April 7 study by Gavekal Dragonomics found that 87 of China’s 100 largest cities by gross domestic product have imposed some form of quarantine curbs.

COVID curbs have also hit travel nationwide, with flag carrier Air China reporting a drop of 70% in March traffic from a year ago.

Home prices stalled for a second month in a row in China’s 70 major cities last month, official data showed on Friday, as the lockdowns sapped consumer confidence and undermined demand.

More policy measures are needed to support the economy, the State Council, or cabinet, said on Wednesday, but analysts are unsure if rate cuts would quickly reverse the slump while the government sticks to its COVID policy.

Some of those locked down in Shanghai have vented frustration on social media over the difficulties in getting food and poor conditions at central quarantine facilities.

Most of Shanghai’s shops were closed, except for some with half-opened shutters from which goods were being carried to waiting delivery drivers.

The city has converted residential buildings into quarantine centers but that is sparking protests from angry neighbors worried about higher risks of infection.

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