Shanghai’s lockdown shows China doesn’t have a roadmap out of covid-zero

China’s financial hub Shanghai has abandoned its strategy of spot neighborhood lockdowns and embarked on a citywide lockdown instead. Authorities found 3,450 asymptomatic infections yesterday, which makes the city China’s largest covid hot spot at the moment.

The two-part lockdown for the city of 25 million, which comes after a shutdown of tech hub Shenzhen, shows that Beijing doesn’t yet have a roadmap away from covid zero, despite murmurs from Chinese government health advisers that the country must find a path to “coexisting” with covid. The country’s latest outbreak involves a relatively low number of cases compared to many countries following a far more relaxed approach.

The eastern side of the city will be under lockdown from today (March 28) until April 1, while the areas to the west of the Huangpu River that runs through the city will shut down between April 1 to 5. Taken together, this is China’s largest citywide lockdown yet.

After an outbreak starting earlier this month, Shanghai authorities appeared to be trying to avoid a lockdown, as officials increasingly recognize the economic toll of the drastic measure. But Wu Fan, an expert on the city’s covid prevention work team, has said that because the virus situation in the city shows a pattern of regional concentration and city-wide distribution, it needs to have “firmer, decisive” measures to reduce mobility and extinguish community spread.

What is the economic impact of the Shanghai lockdown?

During their respective lockdowns, citizens are prohibited from leaving their homes, companies must require employees to work from home, and public transportation and car-hailing services are suspended, according to the official notice (link in Chinese). The steps sparked concerns over China’s fuel demand this year, which sent crude oil future prices down $5 a barrel on Monday to $115.5. Still, unlike the turmoil that battered Chinese stocks on March 14, amid concern over Beijing’s ties to Moscow and the start of a one-week lockdown in Shenzhen lockdown, markets have so far reacted relatively calmly to the new lockdown.

Meanwhile workers being dispatched for mass testing could impact everything from delivery to operations at the country’s largest port. To avoid disruptions, some office-goers are remaining on site, including bankers, many of whom were required by their companies to go back to their offices yesterday before the lockdown took effect, according to Chinese finance media. And some factories and plants are adopting a “closed-loop” system similar to that in place for the Beijing Winter Olympics, with the approval of authorities.

Tesla, whose Chinese gigafactory, which produces around 2,000 cars a day, is in an area that is under the first stage of lockdown in Shanghai, and has said it will halt its production for four days. It also suspended operations for two days earlier this month to allow so authorities could test all its employees. According to the Wall Street Journal, it had been planning for a covid bubble at its plant, but didn’t have time to set it up before the Shanghai lockdown was announced.

An employee of Chinese tech giant ByteDance told Quartz that she has started working from home since early March amid the city’s growing covid cases. “It is total chaos here, sometimes I don’t even know whether my compound is under lockdown or not,” she said.

Many memes surfaced showing Shanghai citizens’ confusion about the changing rules, including one joking that the Huangpu River, used as the divide between the two parts of the city for carrying out the lockdowns, has become a Milky Way or Berlin Wall that would separate people on each side.

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