Can Shanghai meet its zero-Covid deadline and resume production?

After enduring strict pandemic containment measures for over half a month, Shanghai residents are finally hearing something positive from the higher-ups. Stationed in Shanghai since 2 April to oversee the anti-epidemic work, State Council Vice-Premier Sun Chunlan told the media on 15 April that Shanghai's Covid-19 infection growth rate has fallen from 2.27 to 1.23, and that the city was on the road to achieving zero-Covid.

While the higher-ups did not say when exactly the zero-Covid goal would be achieved, Shanghai's Baoshan district party chief Chen Jie said in a speech on 16 April that as the Covid-19 situation deteriorated over the past month, party cadres have been showing signs of fatigue amid public anxiety and rising food supply pressures. Emphasising the "critical moment" in the outbreak, he said, "The State Council Working Group, the municipal party committee and municipal government have asked that the turning point of the epidemic should appear on the 17th and that zero-Covid status should be reached on the 20th."

On the night of 16 April, Shanghai's Fengxian district released "An Initiative to Resolutely Win the Covid-19 Battle" (《关于一鼓作气打赢疫情防控攻坚战的倡议》). The statement said that the district would adopt "static management" (静态管理, a strict lockdown in which residents are not allowed to leave their homes) and conduct mass testing, epidemiological investigations, cleaning and disinfection exercises, and other comprehensive measures from 16 April to end April to resolutely achieve the zero-Covid goal. 　　

That same day, Shanghai's Songjiang district also released an open letter urging everyone to press on in the last leg to achieve "social zero Covid" (社会面清零, zero new cases in the community aside from those already in isolation or quarantine) because "persistence is victory". 　

As such, Sun's declaration that Shanghai would soon reach zero-Covid is not just vague encouragement but a target with a firm deadline. Everyone from the higher-ups to Shanghai's officials at all levels have declared war on the pandemic in Shanghai and are going all out to nip rising infections in the bud over the next few days to achieve social zero Covid.

However, the number of positive Covid-19 cases in Shanghai remains high, with 3,238 new locally transmitted Covid-19 confirmed cases and 21,582 asymptomatic infections recorded on 16 April. Amid the city's high daily infections, it is perhaps difficult for Shanghai to achieve social zero Covid within the next few days. 　

This is exactly why the officials did not publicly announce a specific date for Shanghai to achieve zero-Covid. But everyone knows that Shanghai cannot be locked down forever. Aside from the residents of Shanghai, China's economy, society and politics would suffer as well. In fact, the negative effects envisaged would be no less severe than that brought about by the pandemic itself. 　

XPeng co-founder, chairman and CEO He Xiaopeng recently said that "if the supply chain factories in Shanghai and neighbouring regions cannot find a way to dynamically resume work and production, all OEMs in China may face shutdowns by May".

Huawei executive director Richard Yu Chengdong agreed with this view, saying, "If Shanghai cannot resume production by May, all of the tech and industrial players that have supply chains in the area will come to a complete halt, especially the automotive industry."

Of course, the authorities are aware of the harm caused by Shanghai's standstill. Previously, the top leaders agreed with Shanghai's "precise epidemic control strategies" so as not to affect the city's normal operations. But the virus spread too powerfully and Shanghai was quickly overcome, and was forced to go into a lockdown state of static management.

However, Shanghai being an economic centre, a lockdown there would have an enormous impact on industry and supply chains in China and the world. In 2021, the Shanghai port shipped 47 million TEU of cargo, making it number one in the world for 12 years consecutively, while the import and export of enterprises in the Yangtze River Delta provinces and cities through the Shanghai port amounted to 8.18 trillion RMB, accounting for 81.1% of the total import and export value of the port. And since static management started in Shanghai in early April, not only has Shanghai suffered daily economic losses to the tune of nearly 10 billion RMB, but confidence in China's economy has also been eroded.

While the situation in Shanghai is more severe than that in Jilin province's Changchun, unlike the latter, obviously Shanghai cannot afford to go into lockdown and wait it out for over a month. After two weeks of static management, on 16 April the Shanghai Municipal Commission of Economy and Informatization released guidelines for key businesses to implement closed-loop management, to facilitate resuming work and production in a firm, systematic and effective way, in order to secure and stabilise industrial and supply chains.

The guidelines call for governments of each district and industry park managers to actively support companies to resume work and production, guide companies in having a consistent policy in virus prevention efforts, and provide basic services to ensure supplies for epidemic prevention and daily supplies. As of 15 April, about 2,000 workers with the Quanta Shanghai Manufacturing City (QSMC) in Songjiang in Shanghai have gone back to work.

In fact, on 5 April, Wang Jiangping, deputy director of the State Administration for Industry and Commerce and head of a planning workgroup for Shanghai (上海前方工作组) held a video session calling for a "whitelist" of key companies in the industrial and information sectors to keep running, and to pull resources to ensure that production resumes at 666 companies manufacturing integrated circuits, automobiles, equipment and biomedicine.

But if Shanghai cannot bring the outbreak under control in the coming week and some companies are already resuming operations, there will definitely be a lot of voices online questioning the authorities' actions. However, getting back to work is clearly a wise choice. It is common knowledge that halting work and production in Shanghai has affected countless companies upstream and downstream, and left millions or even tens of millions of people with no income. No party could sustain such a cost.

Shanghai's big moves in "guiding" a return to work have probably gained the approval of the top leaders. But the "guidance" did not come from the Shanghai municipal government but the Municipal Commission of Economy and Informatization - one level below - and the publicity was comparatively low-profile, showing that the Shanghai municipal leaders are leaving room to possibly call a halt at any time if there is a high volume of infections as work and production resume.

Resuming work and production in Shanghai is a new measure taken by the authorities to balance between controlling the virus and maintaining the economy. In reality, no one can provide a perfect solution, but can only balance the pros and cons and choose the lesser of two evils, and minimise the impact of the virus on the economy and society.

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