China COVID curbs hit iPhone output, shut Shanghai Disney

By Martin Quin Pollard and Bernard Orr

BEIJING (Reuters) – China’s COVID-19 curbs forced the closure of Disney’s Shanghai resort on Monday, while production of Apple Inc (NASDAQ:) iPhones at a vast contract manufacturing facility could drop by 30% next month due to coronavirus restrictions, a source told Reuters.

Rising case numbers from numerous outbreaks across China have prompted a tightening of local curbs and lockdowns, including in parts of big cities such as the southern metropolis of Guangzhou, as the economic toll of the country’s zero-COVID policy mounts.

Data released on Monday showed that Chinese factory activity unexpectedly fell in October, dragged down by softening global demand and strict domestic COVID-19 curbs, which hit production, travel and shipping in the world’s second-largest economy.

“With the zero-COVID policy here to stay, we think the economy will continue to struggle heading into 2023,” Zichun Huang, economist at Capital Economics, said in a research note.

At this month’s twice-a-decade Communist Party Congress, President Xi Jinping reiterated China’s commitment to its zero-COVID policy, disappointing investors and countless Chinese frustrated by lockdowns, travel curbs and testing.

“We don’t expect the zero-COVID policy to be abandoned until 2024, which means virus disruptions will keep in-person services activity subdued,” said Huang from Capital Economics.

DISCONTENT

In the central city of Zhengzhou, a Foxconn plant that makes iPhones and employs about 200,000 people has been rocked by discontent over stringent measures to curb the spread of COVID-19.

A person with direct knowledge of the matter said iPhone production at the plant could drop as much as 30% in November, and that Taiwan-based Foxconn, formally Hon Hai Precision Industry Co Ltd, is working to boost production at a factory in Shenzhen to make up for the shortfall.

In Shanghai, the city’s Disney Resort abruptly suspended operations on Monday to comply with COVID-19 prevention measures, with all visitors at the time of the announcement required to stay in the park until they return a negative test for the virus.

Videos circulating on China’s Twitter-like Weibo (NASDAQ:), which could not be independently verified, showed people rushing to the park’s gates, which were already locked. Videos of people fleeing malls and office buildings for fear of being locked in have become commonplace on Chinese social media this year.

New cases in mainland China hit 2,898 on Sunday, topping 2,000 for a second straight day, a tiny number by global standards.

In Guangzhou, one of China’s biggest cities and an economic powerhouse, the number of new locally-transmitted cases totalled 1,110 from Oct. 24-30, up from 402 in the previous seven-day period, with the district of Haizhu, home to 1.8 million people, under lockdown.

A Guangzhou resident named Ye said he was in a suburban quarantine hotel after being told on Oct. 27 that he was deemed a close contact by virtue of walking on the same street three days earlier around the same time as someone who tested positive.

“I do not know how they calculated that. Also there is no room for you to query or dispute it. If they say that’s what you are, then that’s final,” said Ye, an artist in his 50s.

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Over the past week, authorities have raced to get a handle on rising cases in cities across China, including Datong, Xining, Nanjing, Xian, Zhengzhou and Wuhan, forcing temporary lockdown measures.

Du Fan, 40, founder of Wuhan Small Animals Protection Association, which won praise from animal lovers during the pandemic’s first lockdown in the central city in early 2020, said his residential compound had been locked down on Saturday.

“My biggest worry at the moment is that if this continues for too much longer, I’m afraid we won’t be able to continue rescuing the animals, because there’s no way to carry out a lot of work,” he said.

In the Chinese-controlled territory of Macau, authorities reinstated curbs including locking down a major casino over the weekend after a handful of cases were detected. Macau had been COVID-free for more than three months.

However, in Beijing the Universal Resort theme park reopened on Monday after being shut last week because one visitor had tested positive for coronavirus.

Mudanjiang in Heilongjiang province, bordering North Korea, extended a lockdown of some areas, according to local media. Dandong, Suihua, Ruili – cities bordering North Korea, Russia and Myanmar respectively – are also experiencing outbreaks.

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