The surge in covid cases in China resulted in a lockdown in Shanghai and businesses loss including Volkswagen. Volkswagen (VW) has reduced its operations in Shanghai.
On Thursday, the German automaker partially closed its production in the Chinese city, citing supply problems.
Over a dozen companies have halted efforts to float their stock in the major financial center.
Economists are afraid that a slowdown in Shanghai will have an impact on the world’s second-largest economy’s growth.
China’s manufacturing and services sectors declined quicker than predicted this month, according to government data released on Thursday.
The purchasing managers’ index (PMI) of the National Bureau of Statistics fell from 50.2 in February to 49.5 in March. On a 100-point scale, a reading below 50 indicates contraction.
The PMI data is a summary of market conditions, compiled by polling top executives in important industries about their expectations for a variety of parameters such as new orders, production, and employment.
VW announced late Wednesday that it would close part of its Shanghai production owing to a “shortage [of] parts from suppliers.”
When coronavirus infections were on the rise in the city earlier this month, the carmaker shut down the factory before resuming operations 48 hours later.
“What we have lost so far in production can be recovered, [for example] via additional shifts, once the situation eases.” a VW spokesperson said earlier this month.
Its facility in Changchun, China’s far east, has been closed for several weeks.
Meanwhile, more than a dozen companies have postponed plans to offer stock on Shanghai’s STAR Market, which focuses on technology.
Lockdown In Shanghai
This lockdown in Shanghai is the country’s largest since the coronavirus outbreak began.
To avoid economic destabilization, Chinese authorities had avoided shutting down the city of nearly 25 million people until today.
It has been fighting a new wave of illnesses for nearly a month, despite the fact that case counts are low by international standards.
The eastern section of Shanghai, which includes the city’s financial center, is under quarantine for Covid testing.
On Friday, the western part of Shanghai will also go under lockdown.
Because of the gradual approach, half of the city will be able to stay open.