China’s new Covid flareup threatens crucial economic region, raising supply chain worries
China is racing to quash a new virus flareup that risks spilling over into one of its most economically significant regions, raising the specter of disruptions that could roil global supply chains for solar panels, medicines and semiconductor chips.
Infections have surged in Si county in the eastern province of Anhui, with officials reporting 287 cases for Sunday and nearly 1,000 since late last week. Authorities locked down Si and a neighboring county late last week to try and stop the virus from spreading to nearby Jiangsu, the second biggest contributor to China's economic output and a globally important manufacturing hub for the solar sector.
But cases there are already increasing. The city of Wuxi, a biotech hub, reported 35 infections and suspended dine-in services at restaurants and closed entertainment venues. Zhejiang province and Shanghai have also reported Covid-positive patients, fueling concerns about the broader impact across the Yangtze River Delta region that accounts for a quarter of China's economy.
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The fresh outbreaks will be a major test for President Xi Jinping's virus strategy. He last week reaffirmed China would stick to Covid Zero -- which relies on lockdowns and frequent mass testing to stamp out infections -- and said the country would rather endure some temporary impact on economic development than let the virus hurt people's safety and health.
China is only starting to show signs of a nascent recovery from its most recent run of outbreaks, including the bruising two-month lockdown of Shanghai that caused massive manufacturing disruptions and snarled global supply chains.
While the epicenter of the latest outbreak is so far only one small county, and authorities haven't imposed lockdowns in any of the major regional hubs, any escalation in restrictions has the potential to ripple worldwide.
More than one-third of global solar panel manufacturing capacity is located in Jiangsu province, according to BloombergNEF data, and it's also the leading producer of solar cells and wafers. The Yangtze River Delta is also a key maker of components for the iPhone and Mac laptops, semiconductor chips, as well as home to drugmakers and e-commerce operations. Some manufacturers still aren't back to normal after earlier outbreaks.
China reported 380 cases for Sunday, bringing nationwide infections to a level last seen in late May, when Shanghai was on the verge of lifting its lockdown.
The financial hub, which neighbors Jiangsu, reported three local cases Sunday. One was found outside government quarantine after six days of the city reporting no community infections. Zhao Dandan, a vice director at Shanghai's municipal health commission, cautioned in a briefing Sunday that the city still faces risks of a rebound in Covid cases. Beijing reported no new cases.
Elsewhere, Ningde city in Fujian province found 10 new Covid cases and implemented control measures. The city is the headquarters of Contemporary Amperex Technology Co., the largest maker of batteries for electric cars.
Macau, which reported its first two Covid deaths of the pandemic Sunday, wouldn't rule out locking down the entire city if its virus-control measures fail to curb transmission, Secretary for Social Affairs and Culture Ao Ieong U said at a Sunday briefing. The city has announced it will conduct three more rounds of mass testing this week, with 650 workers from mainland China having arrived to provide support.
In Hong Kong, new Chief Executive John Lee said there is no immediate need for a universal compulsory Covid testing campaign in the city, but stressed a need to reduce daily infections, which have risen to the highest since April.
— With assistance by John Liu, Dong Lyu, Dan Murtaugh, and Claire Che
Disclaimer: This article first appeared on Bloomberg, and is published by special syndication arrangement.
