Aurelia Butler

China is battling its biggest Covid surge since the start of the pandemic and has locked down multiple cities including Shenzhen, its technology hub, in a move that threatens already brittle global supply chains.Apple supplier Foxconn and dozens of other factories in Shenzhen have stopped production after authorities imposed a lockdown on the city of 17.5mn.Factories in the tech and manufacturing hub that borders Hong Kong have been ordered to close, residents have been told to stay home and public transport and restaurants shut after China reported more than 5,000 locally transmitted coronavirus cases across the country at the weekend. Rapidly rising case counts were reported in the north-eastern province of Jilin, as well as in Shanghai, where some neighbourhoods have been put into lockdown, and many other cities around the country.Authorities in Jilin are rushing to build four new hospital and quarantine facilities with 16,000 beds to separate those infected with coronavirus and their close contacts from the rest of the population. The construction has revived memories of similar steps taken at the start of the pandemic in Wuhan in 2020, and a live webcam is streaming progress online.The lockdown in Shenzhen is scheduled to last for six days and could compound disruptions to global supply chains that have contributed to rising inflation in the US and Europe. More than 30 Taiwanese companies, making everything from circuit boards to touchscreen modules, announced production stoppages at their factories in the city. Most of the manufacturers said the plants would be shut until March 20 pending further announcements by local authorities.Foxconn said it had adjusted production at other plants to “minimise the potential impact”. Chinese markets fell on Monday, with the Hang Seng Tech index of large technology stocks down more than 7 per cent, the broader Hang Seng index almost 4 per cent lower and China’s CSI 300 index dropping more than 2 per cent. Two workers from Foxconn’s Longhua and Guanlan Technology Parks said they were given three days off with the possibility that this would be extended to March 20. Workers were prohibited from leaving the massive industrial parks that combine dormitories and production facilities, according to an internal notice seen by the Financial Times.The two Shenzhen plants are big production hubs for Apple’s iPhones and workers said they had been assembling the latest iPhone 13. The worsening outbreak is testing President Xi Jinping’s zero-Covid strategy, which has required citywide lockdowns, mass testing and meticulous contact tracing whenever an infection is detected.“The Covid situation in China has deteriorated at an alarming pace over the past week,” said Ting Lu, chief China economist at Nomura. “With the much worsening pandemic and Beijing’s resolution in maintaining its [zero-Covid strategy], we believe China’s ‘around 5.5 per cent’ GDP growth target this year is becoming increasingly unrealistic.”

Christian Gassner, head of a Shenzhen-based furniture manufacturer, said the shutdown was causing havoc, but he was hopeful it would only last a few weeks. “Companies in Shenzhen . . . need to stop operations, the companies cannot operate and suppliers in Dongguan cannot deliver,” he said, referring to a nearby manufacturing hub. The exact cause of the China outbreaks is unknown but some have blamed Hong Kong, which is struggling to deal with a surge of cases that has overwhelmed hospitals and morgues.Health authorities were forced to apologise on Friday after the bodies of Covid victims were stored next to living patients in the city’s hospitals. China’s top coronavirus expert Zhang Wenhong warned that the Omicron subvariant known as BA.2 that is sweeping through Hong Kong was now on the mainland and the country’s healthcare system would buckle if borders were fully opened up.“No matter how fast Omicron BA.2 is, it will still slow down with the pace of life. If we slow down, the virus can’t travel fast,” he said in a social media post.Additional reporting by Nian Liu in Anhui More

Just before Russia invaded Ukraine, Vladimir Putin met Xi Jinping in Beijing. Shortly afterwards, the two countries announced a “no limits” partnership.Whether there are truly no limits to the China-Russia partnership may become clear in the coming days, following reports that Moscow has asked Beijing for military aid. If Xi grants that request, China would in effect be entering a proxy war with the US and Nato nations that are backing Ukraine. That decision could spell the end for the globalised economic system that has fuelled China’s extraordinary rise over the past 40 years.Russia and China share a deep hostility to America’s global power. But they have approached their rivalry with the US in very different ways. China can afford to play a “long game”, relying on its economic might to change the global balance of power. But Russia, in a weaker economic position, has gambled on brute force in Ukraine.Putin’s wager now threatens Beijing’s long game. Chinese policymakers may have envisaged an eventual rupture in relations with the US, yet thanks to Russia, they now face confrontation with the west on a greatly accelerated timetable. If China helps Russia to circumvent western sanctions, it is likely to be targeted with secondary sanctions — a point that Jake Sullivan, the US national security adviser, will make to China’s Yang Jiechi when they meet this week. Supplying arms to the Russian military would fuel calls for western sanctions on China, consumer boycotts and corporate withdrawals.A short, victorious Russian war would have suited China. Beijing’s favoured narrative about the inexorable decline of American power would have looked even more credible. The stage might have been set for a Chinese attack on Taiwan. Instead, Russia has got bogged down. The western alliance has been revived, and the US and its allies have unveiled a new armoury of economic sanctions that will look very threatening in Beijing. China is now having to digest the news that, as a result of western sanctions, Russia has lost access to most of its foreign reserves. As the economist Barry Eichengreen points out, one of the main reasons that countries hold foreign reserves is “as a war chest to be tapped in a geopolitical conflict”. But China, which has the world’s largest foreign reserves, has just discovered that it could lose access to its war chest overnight.China is not nearly self-sufficient in either energy or food. It has worried for decades about the “Malacca Dilemma” — the threat that the US navy could blockade China by cutting off key shipping routes. China’s huge investments in its navy are partly aimed at averting that possibility. Now, however, Beijing has to consider the possibility that a freezing of the country’s foreign reserves, allied to other financial sanctions, could be just as threatening as a naval blockade.Frustratingly for China, there is no easy way out of this. The obvious solution would be for it to trade increasingly in its own currency, the renminbi. But Beijing has shied away from making the RMB fully convertible, fearing that this would lead to destabilising capital flight. The fact that the EU, UK, Swiss, South Koreans, Japanese and Singaporeans have joined in the financial sanctions on Russia has created a united front of developed economies that should concern Beijing. China has repeatedly measured itself directly against the US, ticking off milestones as it goes: largest trading power, largest economy measured by purchasing power, largest navy. Yet if China now has to measure itself against not just the US, but also the EU, UK, Japan, Canada and Australia, its relative position looks much less powerful. It is clear that trying to isolate China economically would be much harder than imposing sanctions on Russia — which is itself hardly painless. China is deeply integrated into western supply chains. Many western multinationals have put China at the centre of their business strategies. For that reason, even some of America’s China hawks have accepted that economic interdependence between the US and China is a given. But a global crisis causes people to re-examine basic assumptions. The idea of an economic severance of China from the west, once unthinkable, is beginning to look more plausible. It might even appeal to the growing constituency of economic nationalists in the west who now regard globalisation as a disastrous error. China’s military calculations also suddenly look more complicated. If the experienced Russian army cannot easily prevail in a land invasion of Ukraine, how could China carry off the much more complex seaborne invasion of Taiwan? The Ukrainian experience suggests that the Taiwanese would fight back and that China would have to accept heavy casualties — as the west poured in military aid to Taiwan. And while President Joe Biden has repeatedly ruled out fighting for Ukraine, he has suggested that the US would defend Taiwan.It is often assumed that China will be the senior partner in the “no limits” partnership with Russia but Xi’s decision to embrace Putin now looks likes a miscalculation. It is hard to play the long game if you tie yourself to a reckless [email protected] More

COLOMBO (Reuters) – Sri Lanka’s finance minister held talks with a top International Monetary Fund (IMF) official on Monday, two sources said, as the island nation seeks help to deal with its plunging reserves, a sliding currency and surging inflation.IMF Asia and Pacific Department Director Changyong Rhee met Finance Minister Basil Rajapaksa and Treasury Secretary S.R. Atygalle, two finance ministry officials told Reuters.Sri Lanka is expected to start formal negotiations with the IMF in April on a possible programme that could boost reserves and put growth on a sustainable path.In Monday’s talks, officials discussed details of the IMF’s latest review of the economy and the assessments outlined by IMF executive directors at an IMF board meeting in late February. Rhee meets Sri Lankan President Gotabaya Rajapaksa on Tuesday. “The talks were wide ranging and covered key challenges the economy is facing,” said one of the ministry officials, asking not to be named given the sensitivity of the talks.”Right now, the focus is on how Sri Lanka can get IMF support. Talks on specific proposals will come later,” the official added, adding that Rajapaksa would brief the cabinet about the talks at a weekly meeting on Monday evening.Sri Lanka has been hit by a dollar drought with reserves dropping to $2.31 billion in February. The country is struggling to pay for critical imports including fuel, food and medicines.Chronic shortages have hit Sri Lankans hard with rolling power cuts, long lines at pumps and record levels of inflation. Last week the Sri Lankan rupee fell 30% after the government allowed the currency to free-float, driving prices even higher. More

New Delhi (Reuters) -India will take “appropriate” steps to calm the rise in oil prices, triggered by Russia’s invasion of Ukraine, the junior oil minister said on Monday, indicating the country could release more oil from national stocks if required.India, the world’s third biggest oil consumer and importer, imports about 85% of its oil needs.”Government of India is ready to take all appropriate action, as deemed fit, for mitigating market volatility and calming the rise in crude oil prices,” Rameswar Teli said in a written reply to lawmakers.Last month India said it was prepared to release additional crude from its national stocks in support of efforts by other major oil importers to mitigate surging global prices.Teli said in November the federal government had joined other major consumers to release 5 million barrels of oil from its strategic petroleum reserves to contain inflationary pressures.On Monday, Teli said India is “closely monitoring global energy markets as well as potential energy supply disruptions as a fallout of the evolving geopolitical situation”. India buys only a fraction of its oil from Russia but has been hit hard by a spike in global oil prices due to Western sanctions against Moscow, the world’s second largest crude exporter.The Indian basket of crude oil had jumped to $112.59/barrel by March 11, after averaging $84.67/barrel in January and $94.07 in February. Indian oil companies have not raised fuel prices since Nov. 4 to shield the customers from higher costs. However, to ease the import cost for companies, India is considering a Russian offer to sell its crude oil and other commodities at a discount, Indian government sources said. More