China restricts iPhone maker, CNOOC operations in Shenzhen to fight Covid-19

New Delhi: As the southern manufacturing powerhouse of Shenzhen battles its most recent Covid outbreak, China has forced some of its largest enterprises, including iPhone manufacturer Foxconn and oil giant CNOOC Ltd. to work within a “closed loop” restricted system for seven days.

The 100 largest businesses in the city, including the automaker BYD Co., the networking tech giants Huawei Technologies Co. and ZTE Corp., and the drone manufacturer DJI, have been asked to limit their operations to only those employees who live within a closed loop or bubble and have little to contact with anyone outside of their facilities or offices. Authorities also advised enterprises to avoid unnecessary interaction between non-manufacturing personnel and factory floors in order to reduce infection, according to a Shenzhen government notice seen by Bloomberg News.

The lockdown comes as China narrowly avoided a recession in the June quarter, when a series of rolling lockdowns shut down enterprises across the country, reducing employment and hurting consumer spending. The Shenzhen action is taking place months before Foxconn Technology Group, which manufactures the majority of iPhones sold worldwide.

A representative for Foxconn stated that business “continued as usual” at its Shenzhen locations. Its factory in Zhengzhou, a city in central China, is a much larger iPhone manufacturing hub. Representatives from DJI and ZTE declined to comment. In response to a message seeking comment, the Shenzhen government’s news office did not answer, and when reached via phone, a representative of the city’s industry and infotech bureau claimed not to be aware of the move. Inquiries from Bloomberg News were not immediately answered by spokespeople for Huawei, CNOOC, or BYD.

China’s Covid Zero plan, which is based on a playbook of closed borders, quarantines, lockdowns, and mass testing, is upending the country’s massive industrial sector even as the rest of the globe deals with the pandemic and opens up.

The Shenzhen action raises the prospect of lockdowns similar to those in Shanghai that sent tens of thousands of workers into isolation. When China’s financial centre suffered the largest outbreak since Wuhan, businesses including Tesla Inc., a supplier to Apple, Semiconductor Manufacturing International Corp., and Quanta Computer Inc. ran their Shanghai facilities in closed loops for weeks or months.

SMIC, China’s largest chipmaker, was among those that reduced their second-quarter revenue forecasts, while Apple anticipated that supply restrictions would cost $4 billion to $8 billion in revenue.

Economists and academics have pushed Beijing to ease restrictions on Covid, which have been blamed for upsetting the economy and sparking huge demonstrations. Officials from Shenzhen requested in their notice that local regulators “resolutely” carry out President Xi Jinping’s directives regarding Covid and adhere to Covid Zero policies.

According to health officials, Shenzhen reported 21 instances on Saturday, up from 19 the day before. Compared to national statistics, that represents a small portion: National Health Commission figures show that China reported 680 instances on Sunday.

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