China has locked down Shenzhen city and the Jilin province following Covid-19 outbreaks at the weekend, threatening technology supply chains.
Apple supplier Foxconn shut down production at two factories in Shenzhen on Monday, after authorities ordered the city of 17.5 million inhabitants into lockdown.
Foxconn said it had adjusted production to minimise the impact of the lockdown, tapping into the company’s “diversified production sites in China”.
Covid-19 rising once more
Cases doubled nationwide in one day to nearly 3,400, prompting Shenzhen to tighten management of the border with Hong Kong, which reported 26,908 cases and 249 deaths on Monday, reports Bloomberg.
The lockdown is scheduled to last a week according to Fortune, and could cause major disruption to international supply lines of tech companies.
More than 30 Taiwanese companies, making everything from circuit boards to touchscreen modules, announced stoppages, reports the FT.
Shenzhen is home to some of the world’s largest ports and is a major terminus for trade with the US.
A Covid-related halt in operations at Shenzhen’s Yantian port last June led to a shipping backlog that took months to ease. Yantian is the world’s fourth largest port and processes about 90% of China’s electronics shipments.
Half of China’s GDP and population will be impacted by the latest outbreak, according to economists at Australia & New Zealand Banking Group, reports Business Standard.
Growth rate cut
China has pursued a dogged zero-Covid strategy that has hit its productivity, with the government’s economic growth target of around 5.5% for 2022 – the lowest official goal in decades, reports CNN.
The latest lockdowns come months after the north western city of Xi’an closed, affecting operations of Samsung and Micron, two of the world’s biggest chipmakers.
The FT reports that US government bond prices dropped today ahead of the Federal Reserve’s monetary policy this week, with interest rate rises possible to curb surging inflation.
The yield on the 10-year US Treasury note, which sets the tone for global borrowing costs hit 2.08%, its highest level since July 2019.
Consumer price inflation in the US rose to an annual rate of 7.9% in February, a 40-year high. Price rises are expected to exceed 7% in the UK this spring.