The world’s second-largest economy is still stubbornly sticking to its COVID-19 strategy, even as other countries reopen and try to live with the virus. Quarantine in major Chinese cities will not only affect the country’s post-pandemic recovery, but may also deal a new blow. to global supply chains.
The southern city of Shenzhen, which borders Hong Kong, is home to Chinese tech giants such as tencent (CEGI)
and Huawei. It imposed a week-long lockdown starting Monday after registering 66 positive cases on Saturday.
In his statement provided by CNN Business on Monday. Foxconn said that “the date for the resumption of the plant should be agreed with the local government.”
Foxconn has two large campuses in Shenzhen. The Taiwanese company “adapted” its production line to other facilities to “minimize the potential impact” of the failure, she added. It does not specify where additional work will be carried out.
Shares in Taipei’s Foxconn Interconnect Technology, a subsidiary of Foxconn, fell 9.8% in Hong Kong on Monday.
China is fighting the worst Covid outbreak since the original outbreak in Wuhan. in early 2020, when the number of cases soared across the country. There were 2,125 local cases of Covid-19 in 58 cities on Sunday, according to the National Health Commission (NHC).
In Shenzhen, all businesses, with the exception of those deemed essential or supplying to Hong Kong, have suspended operations or implemented a work-from-home policy.
The city of 17.5 million has suspended public transport, including the metro and buses.
Shenzhen is also home to one of the world’s largest container ports, and any disruption there could hit an already overburdened global supply chain. Yantian port in Shenzhen last summer was forced to close for nearly a week after infections were found among dockers, leading to a huge backlog of goods that took months to clear and a spike in global freight rates. As long as the port continues to work.
Shares of large companies based in Shenzhen traded poorly in Hong Kong on Monday. Tencent sank 9.8%. Telecommunication firm ZTE (STCOF)
lost 7%. BYD (BDDF)
, China’s largest electric vehicle maker, fell 8.3%. As well as Aerated concrete technologies (AACAF)
manufacturer of audio components, fell 9%.
Apart from Shenzhen, local authorities have also placed a lockdown on the northeast industrial center of Changchun since Friday, where nine million residents have been banned from leaving their areas.
Shanghai, the country’s largest business center, has imposed strict measures following a spike in Covid cases, closing schools and cinemas and restricting entry into the city.
The restrictions came just months after China shut down the northwest city of Xi’an, impacting core business operations, including those of Samsung and Micron, the world’s two largest chipmakers.
These strict measures taken to combat the pandemic have hit China’s economy hard in recent times. Earlier this month, the government set an economic growth target of around 5.5% for 2022, the lowest official target in decades.
— CNN’s Beijing bureau contributed to this report.