Shanghai Plans To Ease Lockdown Amidst Supply Chain Disruption

Shanghai has set out plans for the gradual end to lockdowns and a return to a more normal life as of 1 June, following six weeks of restrictions that have placed a strain on the city.

The Covid-19 lockdowns in Shanghai and much of China in recent weeks have putting a strain on economic activity, manufacturing and global supply chains, with domestic sales of Tesla vehicles particularly badly affected.

China is the only major economy that continues to pursue a strict zero-Covid policy.

Shanghai deputy mayor Zong Ming said on Monday that Shanghai’s reopening would be carried out in stages, with restrictions on movement to largely remain in place until 21 May to prevent a return of infections.

Reopening plan

“From June 1 to mid- and late June, as long as risks of a rebound in infections are controlled, we will fully implement epidemic prevention and control, normalise management and fully restore normal production and life in the city,” she said, Reuters reported.

Monday data showed China’s industrial output fell 2.9 percent in April from a year earlier, sharply down from a 5 percent increase in March, as retail sales shrank 11.1 percent year-on-year following a 3.5 percent drop the month before.

Shanghai plans to begin reopening supermarkets, convenience stores and pharmacies from Monday, but many restrictions on movement are to remain in place until at least Saturday.

The country’s railway operator is to gradually begin increasing the number of trains arriving and departing from the city as of Monday, with airlines also increasing domestic flights.

From Sunday bus and rail transit are to gradually resume, but people will need to show a negative Covid test not older than 48 hours to use them.

Plans to ease lockdown restrictions in the city have regularly fluctuated, and it is unclear how closely Shanghai will adhere to the latest plan.

Tesla sales drop

Restrictions caused April car sales to show a record decline in China, the world’s biggest automobile market, with Tesla amongst the worst affected.

The electric carmaker sold 1,512 vehicles on the mainland in April, down 98 percent from March, according to data from the China Passenger Car Association.

Tesla’s production in China slid 81 percent to 10,757 vehicles in April, down from 55,462 the previous month.

The company was the top seller of electric vehicles in the country in Marcy, delivering 65,184 cars from its Shanghai factory, up 15 percent from February.

The Shanghai Gigafactory 3 exported 484,130 cars last year, nearly half of the company’s 946,000 worldwide deliveries.

The factory was closed for several weeks last month, and after reopening was forced to slow production again last week due to supply issues.

Tesla chief executive Elon Musk told the Financial Times last week he believed the lockdowns would be “lifted rapidly” after speaking with the Chinese government.