1674209547 COVID ravaged Chinese factories face comeback after Lunar New Year

COVID-ravaged Chinese factories face comeback after Lunar New Year

Christian Gassner, whose furniture components factory in the southern Chinese city of Shenzhen had a bleak end to 2022 amid COVID-19 outbreaks, is finally seeing light at the end of the tunnel.

About two months ago, many workers quit to avoid possible lockdowns ahead of the Lunar New Year, and in December, after pandemic controls were lifted, almost everyone who remained fell ill and halted production.

Recovered, they are now spending the holidays with their families in their home towns – and Gassner is looking forward to normalcy finally returning when they return to work.

CHINA’S XI CARE OF RURAL COVID CASES BUT SAYS ‘LIGHTS AHEAD’

Other owners and managers are similarly eager to proceed with what they expect to be a gradual recovery in China’s factory sector, which accounts for nearly a third of the world’s manufactured goods and is a key growth engine for its second-largest economy.

The government’s abrupt lifting of movement restrictions in December was followed by immense illness-related disruption. But factory operators expect the sudden reversal will at least lead to a quicker recovery than would have been the case following a gradual easing of controls.

Economically, the country is finally emerging from a pandemic that has stifled domestic demand and disrupted global supply chains for three years.

“There is a theory that China has been trying to get as many people as possible from COVID-19 in a short period of time to get it over with,” said Li, an executive at an auto parts maker with factories in Shanghai and the eastern city of Hefei on condition of partial anonymity as he was not authorized to speak to the media.

“That’s what it feels like.”

Many of China's factories are aiming to return to normal pre-COVID operating levels after the Lunar New Year celebrations.

Many of China’s factories are aiming to return to normal pre-COVID operating levels after the Lunar New Year celebrations. (China Daily via Portal)

Limp back to normal

Li’s factories stalled last month when up to a third of their workers contracted COVID at the same time.

Some of the clerks filled in at the assembly line. Many workers with mild symptoms offered to continue and asked that the sick leave week they were entitled to be postponed if they needed time to care for sick family members.

“It was quite stressful,” Li said. “The production took a hit.”

It came as a similar shock to many Chinese manufacturers.

In December, exports fell 9.9% yoy, while producer prices fell 0.7%. A manufacturing survey showed the worst drop in activity since the pandemic began in February 2020.

Gassner doesn’t think all of his workers will return immediately after the holiday, which for many Chinese lasts weeks on either side of the Lunar New Year – January 22 this year. But he expects his company, which makes motors and actuators for furniture, to gradually rebuild its workforce and, importantly, its customers.

“Many workers have parents or grandparents who have died or were caught up in the first big wave in their city. Life has changed for them,” said the factory director. So some will not be in a hurry to leave their hometowns.

“But if China is open, there will be more opportunities. There are customers I haven’t seen in three years that are coming up now.”

Forward-looking indicators point to a gradual recovery – not an immediate one, much less one that suddenly returns the country to pre-pandemic paces. The manufacturing survey sub-index for future production rose to its highest level since February, but the sub-index for future orders shrank.

CHINESE CITIZENS ANGRY ABOUT THE LACK OF PREPARATION TO PROTECT THE ELDERLY BEFORE ABANDONING “ZERO-COVID” POLICY

China’s economic growth slowed to 3% last year, one of the weakest performances in the past half-century, and is expected to reach 4.9% this year — still slower than pre-COVID trends.

The country of 1.4 billion, the last major nation to move to treating COVID as endemic, is reopening to a world of higher inflation and borrowing costs and slowing demand, including from its key trading partner, the United States and Europe.

Ni Hong, who works in the finance department of an electric vehicle component maker in downtown Chongqing, no longer expects major COVID disruptions as 85% of the factory’s workers are already infected.

But her company has no plans to increase last year’s payroll.

“We are concerned that upstream companies will not place orders,” Ni said.

Industry colleague Li says its factories may even have to cut jobs later this year if external demand slacks.

CLICK HERE TO GET THE FOX NEWS APP

“If the US economy goes into recession, it will hurt us a lot,” he said. “We rely on US consumers at the end of the day.”