Taiwan calls China’s lockdowns ‘cruel’

The distress of those locked down in Shanghai – screaming for help from their balconies or separated from their children in quarantine camps – has been reported widely in Taiwan, even as the testimonies are swiftly censored in China.

But last week, China’s Taiwan Affairs Office said Taiwan’s new model of handling the pandemic would lead to many deaths.

China reported 7,822 new COVID-19 cases on Sunday, May 1, including 865 symptomatic cases and 6,957 asymptomatic infections, the National Health Commission said on Monday, bringing the number of confirmed infections in the latest outbreak to 217,452

There were 32 new deaths, all in the financial hub of Shanghai, taking the number of deaths to 5,092.

Chinese businesses are also reckoning with the toll of the nation’s COVID zero policy.

When Tesla’s Shanghai plant and other auto factories were shut over the last two months by emergency measures to control China’s biggest COVID-19 outbreak, the burning question was how quickly they could restart to meet surging demand.

Residents lining up for COVID testing in Shanghai.Credit:Bloomberg

But with the Shanghai lockdown grinding into its fourth week, and similar measures imposed in dozens of smaller cities, the world’s largest boom market for electric cars has gone bust.

Other companies from luxury goods makers to fast-food restaurants have also offered a first read on the lost sales and shaken confidence of recent weeks, even as Beijing rolls out measures to help COVID-hit industries and stimulate demand.

Joey Wat, CEO of Yum China, which owns KFC and Taco Bell, said in a letter to investors that April sales had been “significantly impacted” by COVID controls. In response, the company simplified its menu, streamlined staffing and promoted bulk orders for locked-down communities, she said.

Showrooms, stores and malls in Shanghai were shut and its 25 million residents were unable to shop online for much beyond food and daily necessities due to delivery bottlenecks. Analysts at Nomura estimated in mid-April that 45 cities in China, representing 40 per cent of its GDP, were under full or partial lockdowns, with the economy at a growing risk of recession.

The China Passenger Car Association estimated retail deliveries of passenger cars in China were 39 per cent lower in the first three weeks of April from a year earlier.

“Much will depend on how fast these restrictions can be lifted but the coming weeks may be difficult,” Helen de Tissot, chief financial officer at French spirits maker Pernod Ricard , told Reuters on Thursday.

Kering, which owns luxury brands including Gucci and Saint Laurent, said a “significant chunk” of its stores had been shuttered in April.

“It’s very difficult to predict what will happen after the lockdown,” said Jean-Marc Duplaix, Kering’s chief financial officer.

Cities such as Guangzhou are offering incentives to get locked-down residents go back to buying electric cars.

Cities such as Guangzhou are offering incentives to get locked-down residents go back to buying electric cars. Credit:Bloomberg

Apple also warned at its latest results over COVID-hit demand in China.

City authorities from Beijing to Shenzhen are trying to stimulate some demand by giving out millions of dollars worth of shopping vouchers to encourage residents to spend.

On Friday, Guangdong, a manufacturing powerhouse with an economy larger than South Korea’s, rolled out its own incentives to try to restart sales of EVs and plug-in hybrids.

These include subsidies of up to 8,000 yuan ($1,200) for a select range of what China classes as “new energy vehicles”, including from Volkswagen and BYD. Tesla, second in EV sales in China, was excluded from the subsidy programme.

Chongqing, another major auto manufacturing hub, in March said it would offer cash of up to 2,000 yuan ($300) for shoppers who exchange old cars for new models and set aside another $3 million for other measures to spur sales.

While noting such measures, Credit Suisse analysts still said they believe COVID control measures have put both online and offline consumption on a downward spiral.

“We see the consumer sector as being at major risk if the prolonged pandemic and further tightening continue across China,” they said in an April 19 research note.

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