Factories forced to shut down in China amid COVID surge

26 December, 2022 | Vaishali Sharma

COVID-19 World

Because of the fast spread of Covid-19 infection in China, many individuals have been forced indoors, and many stores and restaurants have been closed. Factories and businesses are also being force...

Because of the fast spread of Covid-19 infection in China, many individuals have been forced indoors, and many stores and restaurants have been closed. Factories and businesses are also being forced to halt or reduce output as a result of an increase in ill workers, according to CNN.

When Beijing unexpectedly loosened its tough zero-Covid policy, the Chinese economy was already in trouble. Retail sales fell in November due to widespread lockdowns, while unemployment rose to its highest level in six months. In the first couple weeks of December, car and house sales were down.

According to the most current China Passenger Car Association figures, automakers sold 946,000 automobiles from December 1 to December 18, a 15% decrease from the same period last year.

According to Chinese financial data company Wind, house sales by floor area fell 44% in the 30 largest cities last week compared to the same week last year. According to CNN, property sales in tier-one cities like Beijing and Shanghai fell 53% year on year last week.

According to Chinese media, several industries have been forced to close for weeks due to ill personnel and a lack of orders.

According to Caixin, numerous furniture manufacturers in eastern Jiangsu province have urged staff to take an early and extended vacation to celebrate Chinese New Year. This year, the Lunar New Year celebration comes between January 21 and January 27.

China’s economy is under severe strain as a wave of Covid cases sweeps across the country.
Since the world’s second-largest economy drastically eased its Covid restrictions earlier this month, there has been no clear data on the extent of the virus’ spread on the national level.

But several cities and provinces have said they were seeing tens of thousands of new cases per day, reported CNN.

“The number of people on the streets has dropped off sharply from already subdued levels across the country,” said analysts from Capital Economics in a research note last week. “That will be affecting demand.”

The Chinese economy was already struggling when Beijing abruptly pivoted from its stringent zero-Covid policy. Retail sales had contracted in November because of widespread lockdowns, and unemployment had surged to the highest level in six months.

Top leaders have signaled recently that they would shift focus back to growth next year and have bet on the relaxation of pandemic restrictions to lift the economy, reported CNN.

But statistics don’t look promising. People’s movements have also fallen sharply.

Since the middle of this month, the number of subway trips was down about 60 per cent in major cities from the same period a year ago, according to Wind data.

Nationwide, truck cargo volumes and delivery orders both shrank in the past week, according to statistics from the transportation ministry and the postal service regulator, reported CNN.

BYD, the country’s largest electric vehicle manufacturer, said it had to slash production by 2,000 to 3,000 vehicles per day as more workers are unable to work.

“The Covid outbreak has severely impacted our production,” Lian Yubo, vice president of BYD, said Thursday at a forum in Shenzhen. “20 per cent to 30 per cent of our employees are sick at home.”

He also stated that the company’s monthly output for December is expected to fall short of target by 20,000 to 30,000 automobiles.

According to the Securities Daily, a newspaper published by the state-owned Henan Daily Press Group, as many as 60% of textile and dyeing companies in the coastal provinces of Guangdong, Zhejiang, and Shandong – the country’s main manufacturing hubs – have announced they will suspend production and take a two-month long holiday.

According to Capital Economics experts, the next three weeks might be “the most damaging” in China’s war with Covid.

“With the migration to rural areas ahead of Lunar New Year getting started, any parts of the country not currently in a major Covid wave are likely to be soon,” they said.