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Shanghai lockdown tests the limits of Xi Jinping’s zero-Covid policy

In late March, as Shanghai residents began to worry that rising coronavirus infections would lead the city into its first mass lockdown, authorities turned to social media to calm the situation.

“Please do not believe or spread rumours,” the city government wrote on China’s Weibo platform on March 23, where posts warning that people would imminently be confined to their homes had already spurred panic buying of food.

Just days later, the outline of the rumours — if not the fine details — turned out to be true. In response to thousands of cases, China’s largest city last Sunday unveiled the most significant lockdown measures in the country since the sealing off of Wuhan when Covid-19 first emerged more than two years ago.

The lockdown of its leading financial centre — which initially cut Shanghai in two before eventually confining everyone to their homes by the weekend — was a startling refutation of any sense that China was beginning to relax its approach to the virus. President Xi Jinping in mid-March emphasised the need to minimise the impact of the pandemic on the economy. His comments had been interpreted by some as a signal that Beijing was preparing to ease up on its hardline zero-Covid policy.

Instead, the measures introduced in Shanghai on March 28 highlighted the government’s commitment to a now-globally unique strategy — fine-tuned across outbreaks from Xi’an to Shenzhen — of attempting to completely eliminate local cases no matter the economic and social costs.

Until recently, Xi could tell his own citizens — and the rest of the world — that China had successfully kept the virus at bay. But two years of political investment in the zero-Covid approach is now under more pressure than ever as the country records thousands of daily cases despite an escalating wave of restrictions — even if almost no deaths are being officially reported.

A health worker directs residents Shanghai
A health worker directs residents in Shanghai, where bridges crossing the Huangpu river are closed, drones survey the empty streets and food delivery services are overwhelmed © Hector Retamal/AFP/Getty

In Shanghai, bridges crossing the Huangpu river are closed, drones survey the empty streets, temporary barriers block off the entrances to buildings and food delivery services are overwhelmed. The strategy initially involved a four-day lockdown introduced last Monday on the east side of the river, followed by the same restrictions for those on the west side that came into force at 5am on Friday. By Sunday, the entire city of 26mn was under lockdown after the initial approach was extended.

Residents faced severe measures, including arrest for leaving their homes unless for testing. The French consulate warned last week of the risk of families being separated as a result of positive tests, as well as conditions in vast quarantine centres that house asymptomatic cases.

Elsewhere in China, traffic data analysed by the Financial Times indicated that dozens of cities appeared to be under some form of restriction.

“Nearly everybody’s been affected, individual or business,” says Eric Zheng, president of the American Chamber of Commerce in Shanghai, which published a survey last Friday in which 99 per cent of business respondents said they had been hit by the recent outbreak. “Your life is being disrupted, for sure.”

Shanghai’s sudden lockdown raises difficult questions about China’s zero-Covid approach. It is unclear how effective a lockdown strategy might be against the highly transmissible Omicron variant, which swept neighbouring Hong Kong in February and March. And data last week showed signs of a deepening economic hit from city closures at a time when a property crisis has already shaken the country’s economic growth momentum.

Heightened sensitivity surrounding the government’s approach — criticism of which is censored on social media and non-existent in official media — reflects the extent to which it has taken on a political significance that extends beyond its economic and social consequences.

A leaked recording of a conversation purportedly between a Shanghai resident and an official from the Chinese Center for Disease Control and Prevention, which advises the government on its approach to the disease, went viral at the weekend after the official claimed measures in the city were politically driven and ignored the recommendations of health professionals.

The tone of the call, which the FT was unable to verify but authorities subsequently said they were investigating, contrasted sharply with comments from Wu Zunyou, the CDC’s top epidemiologist. He reaffirmed on Friday that the country must adhere to its “dynamic zero-Covid approach” which is “still the most economical and effective strategy”.

Even if tensions are becoming apparent, the strategy is a source of intense domestic pride for the leadership. “China’s remarkable institutional advantages and strong national strength have been fully demonstrated in the fight against the epidemic,” the state-run People’s Daily wrote last week after the Shanghai lockdown was announced, “and will continue to be demonstrated”.

Severe measures

The city initially attempted to quell growing infection rates by locking down individual complexes that typically house several hundred people — an approach known as “slicing and gridding” — rather than bringing the entire city to a standstill, as in Wuhan two years ago.

Chart showing that mainland China is now seeing its worst outbreak of the pandemic, and like Hong Kong has large numbers of unvaccinated elderly

“Every other day [in March] there was a situation where someone was either locked in the office, or I had a lot of friends who had school lockdowns,” said Jessica, a teacher at an international school in Shanghai who was confined to her home for 48 hours last month before the citywide measures were introduced. “There was a build-up to them saying now we have to put everyone under lockdown.”

When this building-by-building, block-by-block approach proved ineffective in Shanghai, city authorities cleaved the city into halves — divided by the Huangpu river — and enforced lockdown and mass-testing. But rather than keeping everyone at home at once, the authorities outlined a staggered approach. Pudong, the financial district was to be locked down between Monday March 28 and Friday April 1, with the Puxi area then going into a four-day lockdown. Both sides of the city are now shut down.

Although cities across the world, from London to New York, have imposed lockdown measures in the past two years to curb the pandemic, the approach in Shanghai has been even more severe. “In Britain, ‘stay at home’ means something quite different to staying at home in China,” says one Chinese researcher who asked to remain anonymous. “In China, ‘stay at home’ really means staying at home.”

The researcher pointed to Shanghai’s failed attempt to “precisely target a few areas to minimise economic costs” and suggested the city was unlikely to have any autonomy from Beijing to “adjust” its policies. On Saturday, vice-premier Sun Chunlan visited Shanghai and called for swift responses to the outbreak, in a sign of greater direct involvement from Beijing.

There are indications that the central government is closely observing outbreaks in individual cities to tailor its approach. In Shenzhen, another of China’s richest cities, the government imposed a week-long lockdown in March. Although some restrictions have been lifted, residents in the southern manufacturing hub still need negative PCR tests to use public transport.

“The key to addressing the disease lies in early detection and swift action,” said one person close to China’s CDC. “In the case of Shanghai, the authority didn’t take action until the outbreaks entered a later stage.” The status of Omicron as “far more contagious” than earlier variants was driving the shift to ever-tighter restrictions, the person added.

The Shanghai lockdown is just one of several highly visible measures being taken to try to deal with China’s worst outbreak of the virus in two years. Still small by international standards, the outbreak — which hit a record of 13,287 infections nationwide on Sunday, with more than half of them in the city — threatens to undermine the government’s approach if it cannot be contained.

That is where an army of volunteers comes in. Continual testing of millions of people requires vast manpower. In the Guangdong region, home to Shenzhen, more than 384,700 people had volunteered to help as of mid-March.

One volunteer, who previously worked in a government department, said he was living in a shared room in a hotel, but others are based in containers or makeshift dormitories set up at schools. “I personally think that [volunteers] do this in exchange for some access and information,” rather than any patriotic duty, the volunteer said. “As long as you live in buildings under quarantine, you are very likely to be prohibited from going outside, unless you’re a volunteer.”

Economic pain

As Shanghai neared the halfway point of its two-stage quarantine and reported cases fell for the first time in weeks, official data painted a concerning picture of the country’s economic health.

Manufacturing and non-manufacturing PMI data published on Thursday, a gauge of factory and service-sector activity, showed both plunging into contraction in March compared with a month earlier — the first time they have simultaneously shrunk since early 2020.

Larry Hu, chief China economist at Macquarie, suggested the economy was “qualitatively going to slow sharply in March and probably in April as well”, but added that “it’s really hard to estimate how big the slowdown is”.

Empty streets in Shanghai. By Sunday, the entire city of 26mn people was under lockdown
Empty streets in Shanghai. By Sunday, the entire city of 26mn people was under lockdown © STR/AFP/Getty

China bounced back rapidly from the initial shock of the pandemic in early 2020, in contrast to the performance of other major economies. But it has since lost momentum, especially in its crucial property sector. That stands to be compounded by severe restrictions on consumer activity through lockdowns and the uncertain impact of large numbers of cities being closed at the same time.

An FT analysis of a traffic congestion index from Baidu, the Chinese search engine and internet company, discovered that 32 of 99 big cities showed a fall in rush hour traffic on April 1 compared with the 2021 average level, with 13 suffering falls of more than 20 per cent — a sign of severe restrictions. The three cities with the largest drops in traffic were Changchun, Shanghai and Shenyang, all of which are under citywide lockdowns.

“There are huge economic and social costs associated with this zero-tolerance approach but that’s what the government continues to pursue,” said AmCham’s Zheng, who added that China did a good job of containing the virus in the past but that the situation in recent weeks had “changed”.

In its survey of 167 companies, 60 per cent said production had been slowed or reduced by the recent outbreak. Over half have cut their 2022 revenue forecasts.

Zheng pointed to the implementation of “closed-loop” isolation systems at factories, where workers temporarily live on site. It’s a model comparable to the system at the Beijing Winter Olympics, which he said was “not sustainable”. In Shanghai, some financial workers have stayed at work, sleeping on company-provided camp beds in their offices to continue working at a time when they cannot travel to and from home or even go outside.

Health workers are tested at a compound in Shanghai
Health workers are tested at a compound in Shanghai. One volunteer health worker says: ‘I personally think that [volunteers] do this in exchange for some access and information,’ rather than any patriotic duty © Hector Retamal/AFP/Getty

The fiscal costs of the pandemic remain uncertain — especially regarding the blurred distinction between volunteers and existing state employees who have been redirected to anti-pandemic work.

“Of course, zero-Covid is very, very costly,” said Macquarie’s Hu. “I think at this moment the [authorities are] just determined to bring Covid under control . . . they are not thinking too much about fiscal costs.”

Buying time to vaccinate

The lockdown in Shanghai has already lasted longer than advertised, fuelling a chorus of complaints from city residents over the difficulty of obtaining food and medicines and fears over how long it might persist as case numbers continue to surge.

The long-term status of China’s wider approach to the pandemic is similarly difficult to predict. In principle, a zero-Covid strategy allows the country to buy time to vaccinate its elderly population. The example of Hong Kong highlights the risks of failing to do so. The city, which recorded no local cases for months during 2021, was hit by an Omicron outbreak in February that has tallied more than 1mn cases and more than 7,000 deaths — especially among the unvaccinated — in just two months.

Yanzhong Huang, a senior fellow for global health at the Council on Foreign Relations think-tank, expected the end of the Winter Olympics in February to provide a “window for policy change”. But now he thinks Hong Kong has “basically sent a signal to leaders in Beijing” that “this zero-Covid strategy needs to be maintained and implemented in an even more strict manner”.

He suggested that a focus on mass testing, lockdown and quarantine had shifted the emphasis away from a campaign to increase vaccination. More than 40 per cent of those aged over 80 in mainland China are still not fully vaccinated.

Hu suggested that the current approach would last for between six and 12 months and that the government would not only need to target vaccination but also the way it communicated the dangers of the Omicron variant. “The perception for most Chinese people is that Covid is so deadly,” he said.

A medic attends to an elderly Covid patient in Hong Kong, where an Omicron outbreak in February saw millions of cases and more than 7,000 deaths
A medic attends to an elderly Covid patient in Hong Kong, where an Omicron outbreak in February triggered millions of cases and more than 7,000 deaths © Jerome Favre/EPA-EFE/Shutterstock

Despite that perception, official data states that there have been only two deaths among 50,000 symptomatic cases of coronavirus in mainland China in 2022 as of the end of last week — both in the city of Jilin, which has other than Shanghai been the source of the biggest outbreak.

While officials appear to be debating approaches taken across different cities, criticism or even discussion of the government’s zero-Covid policies is highly sensitive in China. In Shanghai, the government warning over rumours came as police investigated two individuals who on March 22 had claimed the city would be completely closed for between four and seven days, saying they had “fabricated the information” in order to attract attention.

For Huang, the way domestic media characterises China’s approach compared to the prospect of “coexistence” with the virus is not only as “a competition between two sets of political systems” but “also between two civilisations”.

“If they give up that easily, it would be tantamount to admitting the failure of this strategy,” he says. “You can no longer use that to showcase the superiority of your political system.”

Additional reporting by Wang Xueqiao in Shanghai, Gloria Li in Hong Kong and Sun Yu in Beijing

https://www.ft.com/content/11d1f525-6253-4238-b0f6-500f508ec073 Shanghai lockdown tests the limits of Xi Jinping’s zero-Covid policy

Adam Bradshaw

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