The Lancet medical journal took a pause from its progressive pandering this week to criticize China’s harsh Coronavirus lockdowns, insisting that the measures have intensified China’s already serious mental health problems.
The June 11 essay, attributed to the journal’s editorial board, notes that China’s lockdowns over the past two years “have often been the most stringent and frequent” among the varying national responses to the pandemic.
“Control policies, including school closures and stay-at-home orders, combined with the stress of the pandemic itself, will have exacerbated the already fragile mental health of many Chinese people,” the essay asserts.
A 2020 national survey on psychological distress conducted in China during the COVID-19 epidemic revealed that more than a third of respondents (35 percent) “experienced distress, including anxiety and depression,” the Lancet observed.
School closures as well were associated with “adverse mental health symptoms and behaviours among children and adolescents,” the essay added, and even as restrictions have been lifted, “widespread anxiety” continues over both adapting to a return to some normalcy and fear that the virus will return.
A resident looks out at the street from their window during the coronavirus lockdown in the Jing’an district in Shanghai, China, on May 5, 2022. (HECTOR RETAMAL/AFP via Getty Images)
The current mental health situation is not an anomaly, the editors assert, since it “plays out against the wider backdrop of mental disorders in China,” which is ongoing.
“Mental health has long been neglected in China, partly because of a deep-rooted cultural stigma,” the Lancet said, and discussing mental health “remains taboo among many communities.”
Families of patients worry “about how a disclosure of mental illness might damage their reputation,” and fear of being ostracized “will undoubtedly disincentivise people with mental disorders from seeking care,” the essay added.
In a rare direct chastisement of Beijing, the Lancet notes that China’s anti-coronavirus policies have been “extreme,” occasioning massive negative side-effects.
“The Chinese Government has vigourously defended its dynamic zero COVID-19 strategy,” the editors state. “But China’s lockdowns have had a huge human cost.”
This cost will “continue to be paid in the future, with the shadow of mental ill-health adversely affecting China’s culture and economy for years to come,” the journal warns. “The Chinese Government must act immediately if it is to heal the wound its extreme policies have inflicted on the Chinese people.”
The Homer Ferrington gas drilling rig, operated by Noble Energy and drilling in an offshore block on concession from the Cypriot government, is seen during President Demetris Christofias’ visit in the east Mediterranean, Nicosia November 21, 2011. REUTERS/Cyprus Public Information Office/Handout
Register now for FREE unlimited access to Reuters.com
Register
LONDON, June 9 (Reuters) – Oil prices hovered near three-month highs on Thursday after parts of Shanghai imposed new COVID-19 lockdown measures although China’s stronger-than-expected exports in May offered a boost to the demand outlook.
Brent crude futures for August dipped 14 cents or 0.1% to $123.44 a barrel at 1045 GMT, while U.S. West Texas Intermediate crude for July was at $121.88 a barrel, down 23 cents or 0.2%.
China’s May exports jumped 16.9% from a year earlier as easing COVID curbs allowed some factories to restart, the fastest growth since January this year and more than double analysts’ expectations. read more
Register now for FREE unlimited access to Reuters.com
Register
“Oil prices have remained flat, with the lockdown of the Minhang district in Shanghai spurring China COVID-zero part two fears, crimping demand in Asia today,” said Jeffrey Halley, OANDA’s senior market analyst for Asia Pacific.
“That said, it is indicative of how tight supplies are that oil has not retreated on that news today.”
Parts of Shanghai began imposing new lockdown restrictions on Thursday, with residents of Minhang district ordered to stay home for two days to control COVID transmission risks. read more
“The export performance is impressive in the context of the country’s multi-city lockdowns in the month,” Stephen Innes, managing partner at SPI Asset Management, said in a note.
Meanwhile, peak summer gasoline demand in the United States continued to provide a floor to prices.
U.S. gasoline stocks unexpectedly dropped, data from the Energy Information Administration (EIA) showed on Wednesday, indicating resilience in demand for the motor fuel during the peak summer period despite sky-high pump prices. read more
“It’s hard to see significant downside in the coming months, with the gasoline market likely to only tighten further as we move deeper into driving season,” said ING’s head of commodities research Warren Patterson.
Register now for FREE unlimited access to Reuters.com
Register
Additional reporting by Florence Tan and Jeslyn Lerh; Editing by Jane Merriman and Edmund Blair
Our Standards: The Thomson Reuters Trust Principles.
Johnson is facing a battle to save his premiership after the report published on Wednesday by senior civil servant Sue Gray criticized a culture of rule-breaking events, and revealed new photographs of him at two separate gatherings.
Gray wrote that “the senior leadership at the centre” of Johnson’s administration “must bear responsibility” for a culture that allowed the parties to take place.
She added there is “no excuse for some of the behaviour” she investigated, which included “excessive alcohol consumption.” Logs of email exchanges were also featured, including some where staff openly discussed hiding their partying from the media.
The report probed 16 events that took place at the heart of government while the United Kingdom was living under strict Covid-19 restrictions.
A picture of Johnson raising a can of beer at a birthday party thrown in his honor was included in the dossier, alongside more images of Johnson at another event.
Speaking in Parliament moments after the report was published, Johnson said he was “humbled” and has “learned my lesson,” adding: “I take full responsibility for everything that took place on my watch.”
But he also repeated previous claims that parties only escalated after he left, and insisted he was “surprised and disappointed” that several drink-fueled events took place.
And he suggested that the cramped quarters of the government buildings and the “extremely long hours” of his staff responding to the Covid-19 crisis could explain why several parties and social events took place.
“I briefly attended such gatherings to thank them for their service, which I believe is one of the essential duties of leadership,” Johnson said.
The report raises serious questions about whether Johnson misled lawmakers when previously denying parties took place.
He was savaged by opposition Labour Party leader Keir Starmer, who said the inquest “provides definitive proof of how those within the building treated the sacrifices of the British people with utter contempt.”
“This report will stand as a monument to the hubris and the arrogance of a government that believed it was one rule for them, and another rule for everyone else,” Starmer said.
“You cannot be a lawmaker and a law-breaker. It’s time to pack his bags.”
Staff told to bring booze and avoid media
Gray also found that Johnson attended a garden party in May 2020 for around half an hour, where approximately “30-40 people” were present.
An invitation to that event told staff of “socially distanced drinks” in the Downing Street garden, open to “whoever is in your office.”
“Could you also suggest they bring their own booze! Not sure we will have enough,” the email from Martin Reynolds, Johnson’s principal private secretary, said, according to the report. The next day, Reynolds noted the media had not reported on the party, writing to a colleague: “We seem to have got away with (it).”
In one email exchange, staff were told to avoid “walking around waving bottles of wine” while media were in the building, and to keep the sound down at gatherings when a Covid-19 ministerial press conference was taking place.
Some staff felt uncomfortable at the behavior inside Number 10 but feared raising the issue, Gray found. And on other occasions, custodial staff were treated poorly by those involved in events.
“I was made aware of multiple examples of a lack of respect and poor treatment of security and cleaning staff. This was unacceptable,” she wrote.
And Gray hinted that Downing Street officials had been unwilling to provide information about the parties, writing: “It was also unfortunately the case that details of some events only became known to me and my team through reporting in the media. This is disappointing.”
Johnson’s time in office has been derailed by the months-long scandal dubbed “Partygate” by the British media. He initially denied any events had taken place, but 16 were subsequently investigated by Gray, 12 were probed by the police and Johnson himself was fined by officers for attending one.
On the eve of the report’s release, ITV News published photographs of Johnson raising a glass with several of his colleagues at a leaving event in November 2020, when indoor mixing was banned.
Johnson is set to address the House of Commons later on Wednesday. Some of the lawmakers in his own Conservative party have joined opposition calls for him to resign in recent weeks, and he will now have to convince his colleagues to stand by him despite the slew of allegations and Gray’s damning inquiry.
China’s economic activity contracted sharply in April as a wave of lockdowns across the country posed the most significant challenge to its growth prospects since Covid-19 emerged over two years ago.
Retail sales, the country’s main gauge of consumer activity which had already entered contraction in March, slumped 11.1 per cent year on year, compared with forecasts of a 6.6 per cent fall from economists polled by Bloomberg.
Industrial production, which underpinned China’s rapid economic recovery from the initial Covid shock in early 2020 and was expected to rise slightly despite the recent restrictions, dropped 2.9 per cent.
The data are the most striking sign of the rising economic toll from China’s approach to coronavirus, which it has sought to quash through citywide lockdowns, mass testing and quarantine centres. The elimination of infections is a priority for President Xi Jinping ahead of his bid for a third term in power this year.
The zero-Covid strategy had largely contained the virus over the past two years but authorities have escalated their implementation of the strategy dramatically in 2022 following an outbreak of the highly infectious Omicron variant, mainly centred around Shanghai, which was locked down in late March.
Dozens of cities and hundreds of millions of people across China have been placed under full or partial lockdowns as part of a policy that is expected to have deep ramifications for global supply chains.
China’s economy was already been under pressure from a liquidity crisis across its highly leveraged real estate developers and a wider property slowdown as home sales collapsed.
Over the weekend, the government effectively cut mortgage base rates for new lending to first-time buyers from 4.6 per cent to 4.4 per cent, the latest in a series of easing measures intended to support one of the country’s most important economic drivers.
“The government faces mounting pressure to launch new stimulus to stabilise the economy,” said Zhiwei Zhang, chief economist at Pinpoint Asset Management, adding that the mortgage rate cut was “one step in that direction”.
But “the effectiveness of these policies depends on how the government will ‘fine-tune’ the zero-tolerance policy against the Omicron crisis”, he said.
Asia markets reversed early gains on Monday to trade lower following the data release. China’s CSI 300 of Shanghai- and Shenzhen-listed stocks opened 0.7 higher but fell 0.8 per cent after the data release, while Hong Kong’s Hang Seng index rose 1.1 per cent before dropping 0.4 per cent.
Last week, authorities said citizens would not be able to leave the country for “non-essential” reasons and introduced more severe measures in Shanghai almost seven weeks after a citywide lockdown was introduced. A city official said on Monday that authorities aimed to broadly reopen Shanghai from June 1.
China’s gross domestic product rose 4.8 per cent year on year in the first quarter. The government has targeted growth of 5.5 per cent for the year, its lowest official target in three decades. Economists have already slashed growth forecasts for the second quarter.
Analysts at Australian bank ANZ maintained a 5 per cent growth target for 2022 on the basis that stimulus will “offset the loss of economic activity in the past two months”. But they were “pessimistic about China’s medium-term outlook” given expectations that supportive measures will be unwound next year.
“The impact of Shanghai’s lockdown is far-reaching,” they wrote. “Economic and technological linkage with the rest of the world is at risk”.
The surveyed unemployment rate was 6.1 per cent in April, its highest level since February 2020.
Additional reporting by Jennifer Creery in Hong Kong
The persistent spread of Covid and resulting stay-home orders — primarily in Shanghai — forced factories to close or operate at limited capacity in April. Pictured here on May 12 is a refrigerator factory in Hefei, China, about a five hours’ drive from Shanghai.
Xie Chen | Visual China Group | Getty Images
BEIJING — China reported a drop in retail sales and industrial production in April — far worse than analysts had expected.
Retail sales fell by 11.1% in April from a year ago, more than the 6.1% decline predicted in a Reuters poll.
Industrial production dropped by 2.9% in April from a year ago, in contrast with expectations for a slight increase of 0.4%.
Last month, the persistent spread of Covid and resulting stay-home orders — primarily in Shanghai — forced factories to close or operate at limited capacity.
The “increasingly grim and complex international environment and greater shock of [the] Covid-19 pandemic at home obviously exceeded expectation, new downward pressure on the economy continued to grow,” the statistics bureau said in a statement. The bureau said the impact of Covid is temporary and that the economy “is expected to stabilize and recover.”
Fixed-asset investment for the first four months of the year rose by 6.8% from a year ago, slightly missing expectations of 7% growth. Investment in real estate declined by 2.7%, while that in manufacturing rose by 12.2.% and that in infrastructure rose by 6.5%.
China’s passenger car production dropped by 41.1% year-on-year in April, according to the China Passenger Car Association. The auto sector in China accounts for about one-sixth of jobs and roughly 10% of retail sales, according to official figures for 2018 compiled by the Ministry of Commerce.
The unemployment rate in China’s 31 largest cities climbed to a new high of 6.7% in April, according to data going back at least to 2018.
The unemployment rate across cities rose by 0.3 percentage points from March to 6.1% in April. The jobless rate among those aged 16 to 24 was nearly three times higher at 18.2%.
For an additional sense of the scale of economic slowdown in April, other data showed a slump in business and household demand for loans.
Read more about China from CNBC Pro
Total social financing — a broad measure of credit and liquidity — roughly halved last month from a year ago to 910.2 billion yuan ($134.07 billion), the People’s Bank of China said late Friday.
However, Macquarie’s Chief China Economist Larry Hu said he expected the drop in credit demand would be short lived. He pointed out that on Sunday, the central government took its “first action … to save property” by cutting mortgage rates for first-time homebuyers.
The rate, which used to follow the five-year loan prime rate as a benchmark, is now 20 basis points below that.
“Today’s cut is far from enough to turn the property sector around, but more property easing would come,” Hu said in a note Sunday.
Real estate and related industries account for about a quarter of China’s GDP, according to Moody’s.
This is a developing story. Please check back for updates.
Covid lockdowns have hit China’s economy, and the Asian giant might have to issue more debt to continue meeting its growth target.
Kevin Frayer | Getty Images News | Getty Images
China may have to issue more debt as it tries to keep growing in the face of Covid lockdowns that are stunting its economy.
The country has signaled in recent weeks that it still wants to meet its growth target of 5.5% this year.
China’s Politburo meeting on April 29 sent a “strong signal that policymakers are committed to this year’s GDP target despite downside risks from COVID-19 disruptions and geopolitical tensions,” ANZ Research analysts wrote in a note on the same day.
To attain the 5.5% target, China may be borrowing from the future and incur more debt.
Chinese state media on Friday reported details of that Politburo meeting, in which officials promised more support for the economy to meet the country’s economic growth target for the year. That support would include infrastructure investment, tax cuts and rebates, measures to boost consumption, and other relief measures for companies.
That’s as foreign investment banks are predicting growth will fall significantly below the5.5% number, with manufacturing activity slumping in April.
That means China is likely to rack up more debt as it tries to meet its growth targets, according to market watchers.
“To attain the 5.5% target, China may be borrowing from the future and incur more debt,” said ANZ Research’s senior China economist, Betty Wang, and senior China strategist, Zhaopeng Xing.
Read more about China from CNBC Pro
Andrew Tilton, chief Asia-Pacific economist at Goldman Sachs, told CNBC last week that China is set to ramp up infrastructure spending.
From Beijing’s point of view, increasing such fiscal spending as well as relaxing debt restrictions would be more desirable than monetary easing, he told CNBC’s “Squawk Box Asia.”
However, one hindrance to the government’s efforts toward infrastructure investment would be the Covid-related restrictions that are indiscriminately being imposed everywhere, Tilton said.
“There are a lot of restrictions around the country even in some cases in places where there aren’t any Covid cases — more precautionary in nature,” he said. “So one of the obstacles to the infrastructure campaign is going to be keeping Covid restrictions targeted on just the areas where they’re most needed.”
One option for the government is to issue so-called local government special bonds, Tilton said.
Those are bonds that are issued by units set up by local and regional governments to fund public infrastructure projects.
In the beleaguered real estate market, the government has also been encouraging lenders to support developers, Tilton said.
Borrowing more to boost growth would be a step backward for Beijing, which has been trying to cut debt before the pandemic even began. The government has targeted the property sector aggressively by rolling out the “three red lines” policy, which is aimed at reining in developers after years of growth fueled by excessive debt. The policy places a limit on debt in relation to a firm’s cash flows, assets and capital levels.
However, that led to a debt crisis late last year as Evergrande and other developers started to default on their debt.
Shocks to business, GDP forecasts
Chinese President Xi Jinping last week called for an “all-out” effort to construct infrastructure, with the country struggling to keep its economy humming since the country’s most recent Covid outbreak began around two months ago.
Restrictions have been imposed in its two largest cities, Beijing and Shanghai, with stay-home orders slapped on millions of people and establishments shut down.
China’s zero-Covid restrictions have hit businesses hard. Nearly 60% of European businesses in the country said they were cutting 2022 revenue projections as a result of Covid controls, according to a survey late last month by the EU Chamber of Commerce in China.
Among Chinese businesses, monthly surveys released in the last week showed sentiment among manufacturing and service businesses fell in April to the lowest since the initial shock of the pandemic in February 2020.
The Caixin services Purchasing Managers’ Index, a private survey which measures China’s manufacturing activity, showed a drop to 36.2 in April, according to data out last Thursday. That’s far below the 50-point mark that separates growth from contraction.
The country’s zero-Covid policy and slowing economy have already sparked predictions from investment banks and other analysts that its growth will fall significantly below its target of 5.5% this year.
Forecasts are ranging from more than 3% to around 4.5%.
“Given the Covid outbreaks’ impact on consumption and industrial output in the first half of 2022, we expect 2022 GDP growth closer to 4.3%, assuming the economy can begin to recover before June, and then rebound,” said Swiss private bank Lombard Odier’s Chief Investment Officer Stephane Monier.
“If the economy continues to suffer from successive lockdown shocks for key urban areas, full-year growth would certainly fall below 4%,” he wrote in a Wednesday note.
The EV maker sold 1,512 vehicles in mainland China last month, down 98% from March, according to data from the China Passenger Car Association. Tesla’s production in the country also slid 81% to 10,757 vehicles in April, compared with 55,462 in March.
Tesla didn’t export any Shanghai-made vehicles in April, compared with 60 exported in March.
The plunge comes as tens of millions of people in at least 31 cities have been under lockdown for weeks, causing massive supply chain disruptions and hitting consumer spending in the world’s second largest economy.
It’s a stark turn for Tesla after a strong start to the year in mainland China. Tesla was the top seller of electric vehicles in the country in March, delivering 65,184 cars from its Shanghai factory. That number was up 15% from February, as consumer demand for EVs remains strong even during the pandemic.
Last year, Tesla’s “Gigafactory” in Shanghai exported 484,130 cars, nearly half of the company’s 936,000 global deliveries.
But its production and sales took a huge hit in April, when the government shut down Shanghai and many other cities to control the spread of the virus.
Tesla’s Gigafactory was closed for weeks last month, and only recently managed to restart production. But it appears to have hit another snag.
On Tuesday, Reuters reported, citing unidentified sources, that Tesla had halted most production again due to issues with suppliers. The company did not respond to a request for comment.
Tesla CEO Elon Musk tried to downplay concerns regarding China lockdowns.
“I had conversations with the Chinese government in recent days and it’s clear that the lockdowns are being lifted rapidly,” Musk said Tuesday at a virtual car conference organized by the Financial Times.
“So I would not expect this to be a significant issue in the coming weeks,” he said.
Shanghai’s impact
Not everyone shares Musk’s optimism. Shanghai has been under a lockdown since late March, and it’s not clear when the restrictions will fully lift.
Authorities in the city further tightened restrictions over the weekend, after President Xi Jinping pledged to “unswervingly” double down on the zero-Covid policy.
Other automakers also reported a steep slowdown in sales and production for last month.
Toyota(TM) said Tuesday that it has suspended operations of 14 production lines at eight plants in Japan, from May 16 to May 21, because of the parts shortage resulting from the lockdown in Shanghai.
The company’s global production would be reduced by 50,000 units for May because of that, it added.
“The shortage of semiconductors, spread of COVID-19 and other factors are making it difficult to look several months ahead.”
Another Japanese automaker, Nissan Motor(NSANY), reported Monday that its China sales were down 46% in April from a year ago.
“We witnessed a continued impact on vehicle production and sales in April due to ongoing semiconductor shortages, supply chain disruptions, and lockdown in key regions and cities from the spread of COVID-19,” said Shohei Yamazaki, senior vice president of Nissan and chairman of the company’s management committee for China.
Overall, China’s passenger car sales fell 34% in April from March, the biggest drop on record, the China Passenger Car Association said.
“As the values of Chinese ADRs and domestic stock market have both declined, and the services sector remains sluggish, people’s incomes have fallen during the pandemic,” the association said. ADRs are securities issued by Chinese firms listed in the United States.
“The purchasing power on the car market has been damaged, and consumers’ willingness to buy a car has dropped,” it said.
The industry group also acknowledged that there has been a “significant impact” on supply chains from the lockdowns in Shanghai and Changchun, as the two cities are major manufacturing bases for key parts in the auto industry.
In Shanghai, five major auto manufacturers recorded an average 75% drop in production in April from the previous month. In northeastern Changchun, big auto makers saw their production fall 54% during the same period.
On Wednesday, separate data from the China Association of Automobile Manufacturers, another major industry association, showed that the country’s overall car sales slumped 46% in April from March, reaching 1.2 million vehicles. It was the lowest April figure in a decade.
Electric vehicles
But the association expects demand to pick up in May, as the peak of Covid outbreak has passed and supply chains are gradually returning to normal.
Retail sales of new energy vehicles—which includes EVs and plug-in hybrids—dropped 37% from March, “different with all the other Aprils in history,” the CPCA said. But the demand is expected to rise again, and remains strong in the near term.
“Under the current environment, self-driving travel has become the first choice. Affected by high oil prices, more people will choose to buy new energy vehicles,” the association said, adding that electric vehicles’ sales will rebound strongly this month from April.
—CNN’s Tokyo bureau and Kathleen Benoza contributed to this report.
Apple’s value chain in China, an emblem of the country’s global role as a source of labour and assembly, has been hit hard by strict lockdowns in Shanghai and neighbouring provinces, raising the risk that the US tech giant may accelerate a shift of its operations away from China, say analysts.
While it is hard to put an exact figure on the losses resulting from the disruption to transport and production along Apple’s extensive value chain in China, chief financial officer Luca Maestri told a conference call on Thursday that Covid-19-related lockdowns and a chip shortage would reduce the company’s revenue by up to US$8 billion in the June quarter.
Maestri said this was “substantially larger than” the impact in the previous quarter and also warned about the likely knock-on effect of reduced consumer demand in China due to lockdowns.
Do you have questions about the biggest topics and trends from around the world? Get the answers with SCMP Knowledge, our new platform of curated content with explainers, FAQs, analyses and infographics brought to you by our award-winning team.
Apple’s close links with China have, historically, been underpinned by two main factors. First, the country is an ideal assembly centre for the California-based tech giant, thanks to its advanced infrastructure, skilled labour force and efficient logistics services. Components from Taiwan, South Korea and elsewhere are assembled into iPhones and iPads on factory floors in China for the whole world to buy.
Secondly, China itself is the second-largest market for Apple, thanks to the country’s growing middle class, which has become increasingly affluent over the past decade, say analysts.
But this positive alignment of factors is now under threat.
China’s strict lockdowns in Shanghai and Jiangsu province – key financial and manufacturing centres – since the end of March to tame the highly-infectious Omicron variant of Covid-19, have raised doubts about the country’s position as an integral part of global supply chains for Apple.
The situation has become more acute for China given that other countries – particularly Vietnam and India, which are returning to normal after Covid-related disruption – are eyeing a bigger share of Apple’s value chain.
Apple CEO Tim Cook has maintained smooth relations with Beijing. Photo: EPA-EFE alt=Apple CEO Tim Cook has maintained smooth relations with Beijing. Photo: EPA-EFE>
According to calculations by the South China Morning Post, more than half of Apple’s 192 suppliers with an internal manufacturing site for the company, including Foxconn, Pegatron, Quanta, Wistron and Compal, have production facilities in lockdown-hit Shanghai and Jiangsu.
Moreover, two Foxconn factories in Shenzhen had to suspend operations for days in March amid a local brief lockdown, while the largest iPhone assembly compound in Zhengzhou has been short of labour as Covid-19 restrictions have made it hard for migrant workers from other areas to reach the Foxconn factory there.
For lesser-known suppliers or subcontractors in Apple’s value chain, it has been even harder to maintain normal levels of operation. Foxconn had to suspend operations at two plants in Kunshan last week after one worker in its closed-loop was found to be infected with Covid-19.
Ming-Chi Kuo, an analyst at TF Securities who follows Apple, said lockdowns in the Yangtze River Delta region would roughly lead to a 30 to 40 per cent drop in shipments this quarter for Apple, although the shortfall could be narrowed to 15 to 25 per cent if other suppliers step in.
Delivery times for Apple MacBook Pros have been delayed by up to five weeks as the sole assembler, Quanta, has been forced to suspend operations due to the Shanghai lockdown, said Kuo.
Apple had already started to consider reducing its reliance on China but the recent lockdowns have accelerated the process, said Kuo. Relocating some production facilities from China is “no longer a proposal but an action plan”, added Kuo.
Apple did not immediately respond to a request for comment on its plans for China in the face of lockdown-related disruption.
The Covid-19 lockdowns come at a time when geopolitical pressure is rising for an economic decoupling between China and the United States.
Former US President Donald Trump pushed for the reshoring of US manufacturing and the Biden administration has been working with regional allies to reduce supply chain reliance on China.
Two of the four campuses of Foxconn in Kunshan, located on the north of the city, went into strict lockdown on April 20 after the Apple supplier reported confirmed Covid cases. Photo: SCMP/Ann Cao alt=Two of the four campuses of Foxconn in Kunshan, located on the north of the city, went into strict lockdown on April 20 after the Apple supplier reported confirmed Covid cases. Photo: SCMP/Ann Cao>
Apple, under chief executive Tim Cook, has maintained a smooth relationship with Beijing despite some sporadic consumer boycotts of Apple products in China. Cook heads up the advisory committee for the economic management school at Tsinghua University, which gives him access to China’s national leaders.
Tech media outlet The Information reported at the end of last year that Cook signed an agreement with Chinese officials, estimated to be worth about US$275 billion, to help China develop its technological prowess and to head off state action which would have hobbled Apple’s devices and services in the country.
In Thursday’s conference call, Cook said Apple was likely to move more production capacity back to the US considering the ongoing challenges. “Our supply chain is truly global … we do a lot in the US and we’ll probably be doing even more here as more chips are produced here,” he said, without giving more details.
Other options for Apple could include India, where land and labour are much cheaper than in the United States. With roads and ports clogged in China due to lockdown, iPhone production in India surged by 50 per cent year-on-year in the first quarter of 2022. This was aided by a decision to assemble the iPhone 13 in a Foxconn factory near Chennai, according to Indian media reports.
And China remains critically important for Apple as a consumer market.
“China growth remains the fuel in the engine [for Apple],” Dan Ives and John Katsingris, analysts at New York-based Wedbush, wrote in a recent research report. But the analysts added that supply chain issues have already cut the sale of around 15 million units of iPhones over the past few quarters.
Meanwhile, there is little sign that China is about to give up on its “dynamic zero” policy approach to Covid-19. For those industrial enterprises allowed to resume production, strict quarantine rules remain in place, which could translate into additional costs, reduced efficiency and fresh uncertainties down the line.
“The best case [for full resumption] is June,” said Kuo.
BEIJING (AP) — Police and new fencing restricted who could leave a locked-down area in Beijing on Tuesday as authorities in the Chinese capital stepped up efforts to prevent a major COVID-19 outbreak like the one that has all but shut down the city of Shanghai.
People lined up for throat swabs across much of Beijing as mass testing was expanded to 11 of the city’s 16 districts.
Another 22 cases were found in the last 24 hours, Beijing health officials said at a late afternoon news conference, bringing the total to 92 since the outbreak was discovered five days ago. That is tiny in comparison to Shanghai, where the number of cases has topped 500,000 and at least 190 people have died. No deaths have been reported from the still-nascent outbreak in Beijing.
An initial announcement of testing in one Beijing district had sparked panic buying in the city of 21 million on Monday, but the situation appeared to calm on Tuesday even as testing was expanded. Public transport appeared to be running largely normally and roads were filled with commuters.
“I’m not worried that Beijing would suffer from a shortage of supplies so I don’t plan to stock up,” said Zhang Yifan, who was on his way to get tested in Dongcheng district. “Because if people stock up blindly, it may cause a waste of resources. If people keep too much supplies at home, it will cause a shortage.”
Beijing has locked down some apartment buildings and residential complexes and on Monday added a larger urban area measuring about 2 by 3 kilometers (1 by 2 miles). Workers put up blue metal fencing along part of the area Tuesday, and police restricted who could leave. Residents are being kept inside their compounds.
Fears of a total lockdown have been fed by disruptions in the supply of food, medicine and daily necessities in Shanghai, a southeast coast business hub whose 25 million residents have only gradually been allowed to leave their homes after three weeks of confinement.
However, 86-year-old Beijing resident Chen Shengzhen said the capital had been given more time to prepare than its southern cousin.
Shanghai’s lockdown “came all of a sudden, so the policies and other aspects were not able to be in place,” leading to short-term hardships in the city, Chen told The Associated Press.
“My daughter works in a government department and they have prepared very well, such as beds, quilts, and articles for women’s use. Even if we need to go into lockdown, we will be fine,” said Chen.
Shanghai residents, confined to their complexes or buildings, had trouble ordering food deliveries and also faced higher prices. The lockdown of China’s largest city has had ripple effects elsewhere as goods have backed up at Shanghai’s port, affecting factory production, global supply chains and China’s own economic growth.
Zhong Xiaobing, the general manager of the Lianhua Supermarket chain in Shanghai, said that shipments of goods from elsewhere in China have gotten smoother since the government organized trucks 10 days ago to bring in goods from key transfer stations, but that imports remain slower because of port and other transport restrictions.
Other cities have also been locked down in China as the omicron variant proves difficult to control, with Baotou in Inner Mongolia the latest to enforce one.
Beijing tested nearly 3.8 million people in an initial round of mass testing in Chaoyang district on Monday. All the results were negative except for one in a group of five that were tested together, a Chaoyang official said. Those five people were being tested to determine who among them is infected.
Chaoyang has had the most cases in the Beijing outbreak, but authorities decided to extend the testing to 10 more districts on Tuesday.
___
Associated Press video producer Olivia Zhang and researcher Yu Bing in Beijing and researcher Chen Si in Shanghai contributed to this report.
Pump jacks operate at sunset in Midland, Texas U.S. February 11, 2019. Picture taken February 11, 2019. REUTERS/Nick Oxford/File Photo
Register now for FREE unlimited access to Reuters.com
Register
Shanghai fences up COVID-hit areas, fuelling fresh outcry
EU considers ‘smart sanctions’ on Russian oil -media
U.S. dollar hits two-year high
NEW YORK, April 25 (Reuters) – Oil slumped about 6% on Monday to its lowest in two weeks on growing worries about the global energy demand outlook due to prolonged COVID-19 lockdowns in Shanghai and potential increases in U.S. interest rates.
In Shanghai, authorities have erected fences outside residential buildings. In Beijing, many people have begun stockpiling food, fearing a similar lockdown after the emergence of a few cases of COVID-19. read more
“It seems that China is the elephant in the room,” said Jeffrey Halley, analyst at brokerage OANDA. “The tightening COVID-zero restrictions in Shanghai, and fears Omicron has spread in Beijing, torpedoed sentiment today.”
Register now for FREE unlimited access to Reuters.com
Register
Brent futures fell $6.17, or 5.8%, to $100.48 a barrel by 11:12 a.m. EDT (1512 GMT). U.S. West Texas Intermediate (WTI) crude fell $5.91, or 5.8%, to $96.16.
“Shanghai shows no signs of letting up its strict zero-COVID policy; instead vowing to step up the enforcement of COVID restrictions, which could hurt oil demand further,” said City Index analyst Fiona Cincotta.
Both benchmarks were on track for their lowest closes since April 11. Both lost nearly 5% last week and Brent has retreated sharply after hitting $139 a barrel last month, its highest level since 2008.
Also pressuring oil, the U.S. dollar
The Chinese yuan was set for its biggest three-day losing streak in nearly four years on worries of an economic slowdown in the world’s biggest oil importer. read more
Oil gained support earlier in the year from tight supplies after Russia’s Feb. 24 invasion of Ukraine caused customers to avoid buying Russian oil due to Western sanctions. But, the market could tighten further with a European Union (EU) ban on Russian crude.
The EU is preparing “smart sanctions” against Russian oil imports, according to a report in The Times of London that cited the European Commission’s executive vice president, Valdis Dombrovskis. read more
Russia’s NK Rosneft PAO (ROSN.MM) failed to sell oil in a jumbo tender after demanding prepayment in roubles, five traders said, meaning the country’s top oil company must find ways to divert more crude to Asian buyers via private deals. read more
A shipping unit of France’s TotalEnergies SE (TTEF.PA) has provisionally chartered a tanker to load Abu Dhabi crude in early May for Europe, the first such shipment in two years, according to traders and a shipping report. read more
Register now for FREE unlimited access to Reuters.com
Register
Additional reporting by Yuka Obayashi in Tokyo and Alex Lawler in London; Editing by David Goodman, Susan Fenton and David Gregorio
Our Standards: The Thomson Reuters Trust Principles.
