This article was originally published by Radio Free Asia and is reprinted with permission.
Shanghai’s glitzy financial district on Monday entered the first part of a two-phase, citywide lockdown that will eventually affect most of the city’s 26 million residents, as the municipal government struggles to implement the ruling Chinese Communist Party (CCP)’s zero-COVID strategy.
Pudong financial district and nearby areas will be locked down from Monday to Friday amid mass, compulsory testing, the government said. That will be followed by a five-day lockdown of the Puxi downtown area on the other side of the Huangpu River.
The move comes after a string of more targeted, localized lockdowns failed to curb the spread of infection, with a 3,500 fresh infections announced in the city on Sunday, the majority of which were asymptomatic.
Pudong residents must stay home and await deliveries of food and other essentials, eschewing any contact with the outside world, while “non-essential businesses” and public transportation services are being suspended, with supermarket shelves emptying fast on Sunday as residents scrambled to stock up in time.
People are also barred from visiting grave sites and cemeteries to mark the April 5 Qing Ming festival, with some enterprises, including the city’s stock exchange, allowed to keep working in a closed bubble.
A Taiwanese woman living in Shanghai, who gave only the surname Hsieh, said the notification had left people with scant time to prepare.
“There is basically nobody delivering takeout in Pudong right now,” she said. “I went to the new fresh food distribution center to try to do an early morning shop, and managed to get a few things, like Yakult, but I couldn’t get milk, vegetables or eggs.”
“Pudong is now shut down, and security is pretty tight [across the river] in Puxi,” Hsieh said. “The supermarkets have basically sold out of fresh food.”
Supplies low
The food shortages follow a string of more local lockdowns based on China’s compulsory traffic-light Health Code app, tracking cases and their close contacts.
Local resident Xu Huan said Pudong’s lockdown will end as Puxi’s begins, but there is already a shortage of fresh vegetables.
“We’ve been locked down for nine days, our PCR tests are all negative and we’re not sick [but the police] won’t let us out to take the air, so I may just jump from the building,” Xu said. “That’ll show them.
Minhang district resident Gu Guoping said his community has already been locked down for several days.
“It started a few days ago,” Gu said. “It has really messed up my life. There is a problem with the supply of vegetables, and we’re not allowed out to buy them.”
“There is also the issue of seeking medical treatment with the hospitals closed,” he said, adding that Baoshan resident Zhou Xuezhen had been detained after filming police shutting down a farmers’ market in her district.
Another Shanghai resident, Mao Hengfeng, said Zhou was detained for posted the clip to a social media group chat.
Relocating to factories
Lee Cheng-hung, president of the Shanghai Taiwanese Business Association, said the lockdown isn’t as total as that imposed on the central city of Wuhan in 2020, because the airport remains open, with international passenger and freight services still operating.
“Our factory has shut down production, and the people are staying on company premises, eating and sleeping there, without going out,” he said.
“I am currently sleeping in an office building — there are dormitories at the factory, and most of the factories have shower facilities,” Lee said. “We can buy in four days’ worth of supplies and store them.”
Employees at some companies had decided to move into their workplaces so they could remain in a “bubble” and keep production lines open, Lee said.
“Some people have brought their luggage over to Pudong from Puxi, getting ready to stay at the factory [for the duration],” he said. “Some employees really prefer to do this.”
Impact on chips
Shanghai is an important center for Taiwanese-invested chip foundries, packaging and testing facilities, as well as electric vehicle production, with Pegatron, Quanta, TSMC and ASE all having factories there.
TSMC’s Songjiang plant mainly produces 8-inch wafers, while packager and tester ASE has a large facility there. Laptop-maker Quanta also produces automotive electronic parts in Shanghai, while Pegatron assembles iPhones.
“TSMC is in full compliance with the [Chinese] government’s epidemic prevention measures, which are currently not affecting production,” the company said in a statement to RFA on Monday.
Liu Pei-chen, a researcher and industrial consultant at the Taiwan Economic Research Institute, said the combined revenue of TSMC’s Songjiang plant accounts for just 1.5 percent of TSMC’s overall operations.
“If their 8-inch fab and 2, 3, 5, 6, and 8 eight-inch wafer fabs in Taiwan can increase production, then the current changes in Shanghai will have little impact on TSMC’s operations,” Liu said.
“Taiwan’s overall foundry production accounts for 90 percent of global production, while China’s foundries currently account for 6 percent, while as much as 87 percent of packaging and testing is done in Taiwan,” he said.
Homegrown China Semiconductor (SMIC) also makes has 8-inch and 12-inch integrated chip factories in Shanghai.
‘Living with COVID-19’ strategy
Hsu Cheng-wen, who heads the Federation of Taiwan Enterprises, said the Shanghai lockdown will likely impact the entire domestic economy.
“Shanghai accounts for more than 50 percent of the transportation volume of all people and goods entering China from overseas, so once the city shuts down, the rest of China will also be affected, both economically and in other ways,” Hsu told RFA. “Right now, logistics and freight are still operating.”
“There won’t be a visible impact in the short term, but if it goes on longer, then the effect of this lockdown will be terrible,” he said.
He called on the authorities to move to a “living with COVID-19” strategy.
“Shanghai insists on zero-COVID … I hope we will see some reductions or exemptions in corporate income tax and value-added tax to offset the damage done by the pandemic,” Hsu said.
China detected 1,219 newly confirmed cases of COVID-19 on Sunday, more 1,000 of which were in the northeastern province of Jilin, along with 4,996 asymptomatic cases, the National Health Commission reported on Monday.
