Cities in China that are not in lockdown are still feeling the pain

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The north Chinese city of Tianjin has been out of lockdown since last month, but businesses there still cannot operate normally.

“40 percent of our local members here had to stop production temporarily because they ran out of material [from other parts of China in lockdown]Christoph Schrempp, chairman of the Tianjin chapter of the European Union Chamber of Commerce, said at a news conference last week.

China has pushed back COVID-19 cases to below 1,300 cases a day after a strict seven-week lockdown in Shanghai, where most infections are concentrated.

A recent study by Fudan University in Shanghai estimates that lifting China’s zero-tolerance policy for COVID will lead to 1.6 million deaths, given the country’s weak intensive care infrastructure and low vaccination coverage among the elderly population.

“The question we all have is, ‘When is China going to do a massive vaccination campaign or even offer a mix of vaccines to create an environment where you don’t have to lock down because your people have a certain number of herds? Immunity?’” said Jörg Wuttke, President of the European Chamber. “We don’t see any of that at the moment.”

While the lockdown in the early stages of the pandemic onset helped factories in China resume operations within months to fill overseas orders, the same playbook was less effective against the more contagious Omicron variant. Even in Chinese cities where restrictions are not as strict, many companies, especially foreign ones, said their businesses are not operating as usual.

Aside from cargo not getting through smoothly, business travel, even between cities, is difficult.

Massimo Bagnasco, chairman of the Southwest China chapter of the European Chamber in Chengdu, had plans to hold an event in Chongqing last week.

“I was told that I should have at least four COVID tests to move from Chengdu to Chongqing, both cities without high-risk zones, in less than 24 hours,” Bagnasco said at the press conference.

He then said the Chongqing government had reduced the maximum number of people allowed at an event to 50. Bagnasco put the event back online.

For travelers from abroad, the requirements are even stricter. There is extensive testing, mandatory centralized quarantine of at least 10 days, followed by home quarantine. The northeastern city of Shenyang is perhaps the strictest with incoming travelers.

“We’re still at 28 plus 28,” said Harald Kumpfert, chair of the Shenyang chapter of the EU chamber. That means 28 days of quarantine in a government facility plus another 28 days of home quarantine.

Kummert said these COVID restrictions are making it difficult to attract new foreign investment and foreign talent.

Even if a foreign company based in China only has local staff, the Chinese government announced last week that its citizens would only be allowed to travel abroad for “essential” travel.

“Many employees of our member companies [are] really shocked by this because obviously they are no longer allowed to travel and this … makes communication and exchanges with headquarters very difficult,” said Bettina Schoen-Behanzin, the Chair of the Shanghai chapter of the European Chamber.

Chinese government media insist China is still a great place to do business. Foreign direct investment increased by over 20% in the first four months of this year compared to 2021.

But those investment decisions were made years in advance, Michael Hart, president of the US Chamber of Commerce in China, said at a news conference. He’s not sure the money will keep flowing.

“Unfortunately, the COVID lockdown this year and the restrictions for the past two years will mean that three, four, five years from now, we’re most likely going to see a drop in investment,” Hart said.

Beijing, where he lives, is on the verge of a lockdown, and Tianjin appears to be slipping into one as well.

Business leaders say they don’t see an exit ramp as the rest of the world learns to live with the virus and opening up.

Additional research by Charles Zhang.

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