SHANGHAI, China – As businesses warn of the mounting economic toll of restrictions, China announced on Friday, April 15, that it will help hundreds of companies in key sectors to resume production in locked-down Shanghai, the commercial capital at the center of the country’s latest COVID-19 outbreak.
The statement comes as a rising number of corporate leaders and analysts warn that China’s tough “zero-COVID” policy is causing global supply chain problems for everything from electric automobiles to iPhones.
The Ministry of Industry and Information Technology stated late Friday that it will work with 666 semiconductor, automobile, and medical enterprises to get them back to work.
The regulator added that teams have been dispatched to Shanghai to ensure the restart of operations at these significant industrial firms.
Several foreign firms have lately declared production halts at their Chinese operations, including electric-car maker Xpeng and technology giant Huawei, which have warned of potential industry-wide output suspensions if suppliers in Shanghai and surrounding areas are unable to resume work.
Airlines and the real estate industry are also hurting.
Although the 23,000 new infections in Shanghai on Friday were down from almost 27,000 the day before, they included a new high of 3,200 symptomatic cases, compared to 2,573 the day before.
He Xiaopeng, Xpeng’s chief executive officer, issued a grim warning for the sector unless things 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.
In private comments confirmed by Huawei, Richard Yu, CEO of both Huawei’s consumer business group and its smart car section, echoed His sentiments, adding that the industry was facing massive losses.
Analysts predict that several Apple items, as well as Dell and Lenovo computers, may be delayed.
The transport ministry established a national pass system on Friday that will allow freight vehicles to travel between higher risk zones without experiencing delays as long as drivers have normal temperatures and a virus test that is less than 48 hours old.
According to a survey released on April 7 by Gavekal Dragonomics, 87 of China’s top 100 cities by GDP have implemented some type of quarantine restrictions.
COVID-19 restrictions have impacted travel across the country, with Air China reporting a 70% decline in March volume compared to a year before.
Home prices in China’s 70 main cities halted for the second month in a succession last month, according to official data released on Friday, as the lockdowns eroded consumer confidence and stifled demand.
On social media, some of those imprisoned in Shanghai have expressed their dissatisfaction with the difficulty in obtaining food and the bad conditions at central quarantine facilities.
The majority of Shanghai’s stores were shuttered, except a few with partially open shutters from which goods were being delivered to waiting for delivery drivers.
The city has converted residential buildings into quarantine centers, but this has sparked outrage from residents concerned about increased infection risks.