Shock in Shanghai

China’s financial capital is locked down


In stasis: Shanghai

Is it possible to catch a rat in a crockery shop without breaking the porcelain? This is what Shanghai has been trying to do in containing the pandemic, according to Zhang Wenhong, head of the city’s Covid-19 clinical experts team.

If that sounds difficult, Zhang faces a much bigger problem – there are now a lot of rats in the ‘shop’. New infections have been ticking up quickly in China’s financial hub. Local authorities have reported more than 20,000 cases. That has put Shanghai in a difficult position as the city fights the pandemic with stringent prevention policies while trying to minimise the disruption to its economy.

Even as most other countries began to switch to a ‘living with the virus’ strategy, China is sticking to the so-called ‘dynamic zero Covid’ approach, which relies on citywide lockdowns, mass testing and quarantine camps to snuff out outbreaks of infection as rapidly as possible. Shenzhen, for instance, claimed to have successfully stemmed an outbreak last month following a week of partial lockdowns.

With a 26 million population  Shanghai had got through the intial phases of the pandemic by adopting a hybrid approach. The municipal authorities did not order a full citywide lockdown for much of the time since the coronavirus was first reported in Wuhan two years ago. Mass tests were restricted to district levels as local authorities relied on tracking devices and medical experts such as Zhang to impose quarantine measures with tactical precision. That helps to explain Zhang’s rat and porcelain shop metaphor.

Last month Chinese President Xi Jinping told local governments to adhere to the ‘dynamic zero-Covid’ approach but with the caveat that “more effective measures should be taken to achieve maximum effect with minimum cost”.

Things changed, however, as the highly transmissible Omicron variant started to make its way into major Chinese cities. On Wednesday, Shanghai again reported more than 5,600 newly confirmed cases (of which 5,298 were asymptomatic).

The escalating outbreak has finally forced the Shanghai government to introduce a ‘phased lockdown’. The first, running from Monday to Friday, applied to the eastern part of the city including the financial district of Pudong. The second will then focus on the western half and extend from Friday to April 5. All residents have to be tested during the lockdown although local authorities now also allow people to perform rapid tests on their own, instead of queuing up to take the more accurate nucleic acid test.

Trading on the Shanghai Stock Exchange, as well as shipments of  exports from in the world’s busiest port, will continue during the phased lockdown.

“If Shanghai came to a complete halt, there would be many international cargo ships drifting [and waiting to dock] in the East China Sea,” explained Wu Fan, a medical expert on the city’s pandemic task force.

Reinforcing the contrasting approaches of‘zero Covid’ and ‘living with the virus’ is the way media outlets are reporting differently on the situation in Shanghai over the past week. Domestic coverage has focused on how disciplined citizens were in following quarantine rules, for instance, while the international media has picked out some of the local frustration with the lockdown regime. The BBC got hold of various videos posted online (and quickly deleted by state censors) which showed people in housing compounds chanting that they wanted to be freed. There were also reports that some diners got trapped for days in restaurants after some districts were locked down (anecdotal reports were they were unable to leave, shower or sleep in a bed until they tested negative for the requisite period). In a somewhat more organised way financial firms have requested some staff to camp out in their offices to ensure smooth daily operations (they are given sleeping bags, toiletries, fridges full of food and cash bonuses).

All in all, Shanghai is now performing an unprecedented two-phase experiment in containing Covid-19. If successful, the experience could be applied to other major  cities – in contrast to Hong Kong’s experience where Omicron is thought to have infected more than half the population, rendering the  ‘zero Covid’ strategies largely redundant (see WiC578).

In the meantime, the country (and the world) watch on…

© ChinTell Ltd. All rights reserved.

Sponsored by HSBC.

The Week in China website and the weekly magazine publications are owned and maintained by ChinTell Limited, Hong Kong. Neither HSBC nor any member of the HSBC group of companies ("HSBC") endorses the contents and/or is involved in selecting, creating or editing the contents of the Week in China website or the Week in China magazine. The views expressed in these publications are solely the views of ChinTell Limited and do not necessarily reflect the views or investment ideas of HSBC. No responsibility will therefore be assumed by HSBC for the contents of these publications or for the errors or omissions therein.