Over 22 million residents, 2.5 million businesses rejoice as Shanghai reopens

Over  22 million residents, 2.5 million businesses rejoice as Shanghai reopens
Andrew MullenDeputy Editor, Political Economy
4 June 2022
Dear Global Impact Readers,

After two months, China’s commercial hub of Shanghai lifted its citywide lockdown on Wednesday, sending people back onto the streets for the first time since the start of April.

In some cases, people left their residential compounds on the stroke of midnight to eat, drink and be merry.

In this issue, the SCMP’s Business Editor Eugene Tang looks back at the day, when over 22 million people were allowed to resume their daily lives and over 2.5 million businesses were given free rein to operate, and wonders whether the lockdown was all worth it.

Andrew Mullen
Deputy Editor, Political Economy

Was Shanghai’s two-month lockdown really worth it?

Ang Kiam Lian said he had not seen such frenzy in the decade since his relocation from Singapore to Shanghai, where passers-by would ask him every five minutes for a table at his seafood restaurant on the bustling Huaihai Road in the former French Concession.

That bustle returned this week as commuters, shoppers and revellers hit the streets all over Shanghai after authorities officially ended two months of citywide lockdowns, allowing 22.5 million residents, or 90 per cent of the city’s entire population, to leave their residential compounds.

All 2.67 million registered businesses - from corner shops and eateries to global manufacturers like Tesla - were also given free rein to resume operations.

The lockdowns ended formally on Wednesday after health authorities brought the city’s Omicron outbreak under control. The death toll since April 18 stood at 588, or 0.09 per cent of the 626,600 people who caught the highly transmissible Covid-19 variant in the city of 25 million people.

The mortality rate and infection numbers were mild - most cases showed no symptoms - by global standards.

Did the authorities overreact? A projection published on May 10 in the peer-reviewed Nature Medicine journal showed that 1.5 million people could die without Covid-19 controls and effective antiviral therapies.

An out-of-control outbreak could cause 112 million symptomatic cases, or 80 infections per 1,000 people, requiring intensive-care treatment for 2.7 million people, according to another
joint study.

Shanghai, the commercial hub of China, is equipped with the country’s best medical facilities, so if a metropolis endowed with Shanghai’s financial and scientific resources fell to Omicron, the consequences would be unthinkable for poorer cities and regions further inland.

So Shanghai authorities, overseen by Vice-Premier Sun Chunlan, who based herself in the city in late March, replaced the phased, rolling lockdown of the city with a total shutdown on April 1.

The initial days were challenging: daily lives were upended, delivery services were overwhelmed, and some elderly residents died from non-Covid ailments because they could not receive medical attention amid the lockdowns.

The lockdowns soon spread to neighbouring cities and counties, as transport links from Shanghai were severed, forcing factories and businesses in Jiangsu and Zhejiang provinces into similar shutdowns.

The ripple effects from locking down the world’s factory spread far and wide, straining supply chains all over the world, from Japan’s carmakers to India’s shoe cobblers and Europe’s fashion ateliers.

Hundreds of thousands of small businesses within China were driven to the brink of collapse. Many residents fled the city, signing declarations to not return for the duration of the lockdown. The result is an exodus of talent that will disrupt the city’s labour market.

Coronavirus-driven disruptions have already affected 160 million people this year in cities with a combined economic output of 18 trillion yuan (US$2.69 trillion), according one estimate.

Shanghai’s lockdown could reduce China’s economic output by between 2.5 to 3 per cent, according to another projection by a group of economists.

To repair the US$637 billion economy, Shanghai’s government unveiled a 50-point plan last week to give 300 billion yuan of tax breaks, incentives and subsidies to the city’s businesses. Landlords were asked to give their retail tenants rent holidays.

The government will also offer up to 3 million yuan in incentives for each company to fend off large-scale lay-offs. To help the automotive industry in Shanghai, the government cut taxes by 60 billion yuan to spur sales. A 10,000 yuan subsidy for electric-car purchases and retail spending coupons are also being rolled out.

Wednesday marked the start of what Shanghai’s authorities called a “gradual” and “phased” return to normality. The Post dispatched its Shanghai correspondents across the city to report on how people were responding to their new-found freedom.

Residents in high-risk areas with new infections, though, are still homebound, estimated at 10 per cent of the city’s population, or 2.5 million people.

Flights in and out of Shanghai, one of China’s largest gateway cities, have contracted by about 90 per cent to around a dozen domestic destinations and a handful of overseas ones like Hong Kong, Macau, Seoul and Frankfurt this week.

Large manufacturers like Tesla are still required to maintain their “closed-loop” operations, where employees must be quarantined, sleep on site, and be tested every day for Covid-19.

Small businesses are still bearing the brunt of the shutdown’s impact, suffering losses from missed deadlines, lost clients, cancelled orders and empty order pipelines.

For now, Shanghai residents are jubilant and relieved. At the stroke of midnight, as Tuesday turned into Wednesday, they poured onto the streets, many of them stepping out of their homes for the first time in nine weeks. They hugged, danced, sang the socialist anthem The Internationale and shared videos of themselves on social media.

The noise, traffic and pedestrians are back in one of the most congested cities on Earth. Most state-owned businesses and the public service ordered staff to return to their offices, while private enterprises are giving employees the option to work from home.

The next few days and weeks until June 30 will again test Shanghai’s mettle, as the city deals with the inevitable resurgence of Covid-19 cases with millions of people mingling in close proximity, without masks. Already, several buildings on Caojiadu Road in the Jing’an district had to return to shutdown after a singular infection was found.

Local authorities have installed 15,000 testing booths across the city’s 16 districts, ordering local communities to frequently test residents for Omicron.

That’s the new “normal” that Shanghai’s residents will have to live with.


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