Most factories in Shanghai resume work as Covid controls ease, ministry says

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German automaker Volkswagen is one of state-owned automaker SAIC’s foreign partners in China. Pictured here on June 7, 2022, is the joint venture’s factory in Shanghai.
Qilai Shen | Bloomberg | Getty Images

BEIJING — Factories in two of China’s Covid-hit economic hubs have mostly resumed work as the impact of the virus subsides, according to China’s Ministry of Industry and Information Technology.

In Shanghai, the city with the largest gross domestic product in China, 96.3% of industrial businesses tracked by the government have resumed work, with a production rate above 70%, Vice Minister Xin Guobin told reporters on Tuesday.

In the southern province of Guangdong, an industrial hub, production has basically returned to normal, Xin said.

Shanghai has attempted to reopen fully this month after a roughly two-month lockdown to control a Covid outbreak. Parts of Guangdong had shut down briefly in March. Some factories, primarily the few hundred on a government whitelist, were allowed to operate if workers lived on-site in a bubble.

Tesla has achieved full production, while Shanghai’s local state-owned automaker SAIC saw production in early June rise by nearly 60% year on year, Xin said. SAIC is also the partner for Volkswagen and General Motors in China.

Tesla, Volkswagen and GM did not immediately respond to a CNBC request for comment.

For Shanghai’s auto industry overall, production is “steadily increasing,” Xin said in Mandarin, according to a CNBC translation. He did not share specific figures.

In the neighboring provinces of Jiangsu, Zhejiang and Anhui, Xin said, resumption of work and production was “better than expected,” without providing numbers.

“Many companies said through two months of effort in May and June, they would try to regain output delayed from March and April,” Xin said.

In early May, Nomura said about 31% of China’s GDP was affected by the latest lockdowns. That estimate fell to 9% as of Monday.

It remains unclear how quickly China will be able to recover from the latest impact of Covid and restrictions on business activity. Services businesses have been affected more than manufacturers, which can often keep on producing if workers live on-site and trucks can transport supplies.

China is set to release May industrial production and retail sales on Wednesday.

Industrial production unexpectedly fell by 2.9% in April. That decline is expected to improve to a 0.7% year-on-year drop in May, according to a Reuters poll.

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