China widens COVID sidewalks, iPhone factory unrest adds to economic concerns

  • COVID restrictions grew as the number of cases increased
  • Unrest in the iPhone factory underlines industrial, social risks
  • Analysts warn of potential for wider lockdowns
  • Resort Sanya imposes movement restrictions on new arrivals

BEIJING, Nov 23 (Reuters) – Chinese cities imposed more curbs on Wednesday to curb rising coronavirus cases, compounding investor concerns about the economy as fresh turmoil at the world’s largest iPhone factory the social and industrial toll of China’s strict COVID-19 measures.

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

Sanya, the resort town on Hainan Island, banned people from going to restaurants and shopping malls within three days of arrival, and numerous cities across China imposed local lockdowns as infections reached their highest levels in April.

The measures cloud the outlook for the world’s second-largest economy and dampen hopes that China will soon significantly ease its aberrant COVID stance as China battles the highly contagious Omicron variant for its first winter.

“While there is little chance that authorities will choose to step back from the zero-COVID policy over the winter, there is a significant risk that containment efforts will fail,” Capital Economics analysts wrote.

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

China’s COVID curbs, the tightest in the world, have led to widespread discontent and disruption to production among manufacturers, including Taiwan’s Foxconn (2317.TW), Apple Inc.’s largest iPhone supplier.

Footage uploaded to social media on Wednesday showed Foxconn workers tearing down barriers and battling authorities in safety suits, chanting “give us our pay”. The unrest follows weeks of unrest in which dozens of workers have left the factory due to COVID controls. The videos could not be immediately verified by Reuters.

Places that account for nearly a fifth of China’s total GDP are under some form of lockdown or restraint, real estate firm Nomura estimated earlier this week, a figure that would surpass Britain’s GDP.


While the number of infections is low by global standards, China is sticking to its zero-COVID approach, a signature policy of President Xi Jinping that officials claim saves lives and prevents the medical system from being overwhelmed.

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

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

“While the zero-COVID strategy has become more lenient over time, the combination of more contagious COVID variants and continued vaccine gaps has led to the need for more frequent lockdowns, weighing on consumption and private investment,” said IMF official Gita Gopinath.

Residents are increasingly fed up with nearly three years of restrictions, and Wednesday’s protest at the Foxconn factory in Zhengzhou comes after crowds recently stormed through barriers and clashed with hard-wearing workers in the southern city of Guangzhou.

The rising number of cases is also testing China to avoid one-size-fits-all measures, such as massive lockdowns to curb outbreaks, and rely instead on recently revised COVID rules.

However, the number of unofficial lockdowns has increased, including in residential buildings and neighborhoods in Beijing, where the number of cases hit a new high on Tuesday.

In Shanghai, a city of 25 million that went into lockdown for two months earlier this year, China’s largest auto association said on Wednesday it would cancel the second day of the China Automotive Overseas Development Summit being held there over COVID concerns.

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

Major manufacturing hubs of Chongqing and Guangzhou have seen continued high levels of infection, accounting for the majority of China’s caseload. The number of cases in Guangzhou fell slightly to 7,970 on Tuesday and authorities said infections are still concentrated in key areas of Haizhu district.

Investors who hoped last week for China to ease restrictions have become concerned that the wave of infection could slow economic reopening. read more Many analysts say significant easing of COVID restrictions is unlikely before March or April.

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

Analysts are also lowering oil demand forecasts from the world’s largest crude oil importer, with recent COVID restrictions already driving global oil futures down.

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

Reporting by Beijing and Shanghai Editorials; Written by Bernard Orr; Edited by Muralikumar Anantharaman, Miral Fahmy, Tony Munroe and Bernadette Baum

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