Businesses in China: Caught in an Infinite Loop

DThe video was not only shared at the place where it happened, southwest China, over the weekend. Across the country, people were shocked last Saturday when a government henchman dressed in a white hazmat suit welded an iron bar across the central front door of a block of flats in the city of Chengdu to prevent residents from escaping their lockdown ordered by the authorities.

A day earlier, a total of ten people had died in a high-rise building fire in the Xinjiang region, which the fire brigade was apparently unable to break through in time due to barriers erected to enforce the lockdown. So it was not surprising that on Sunday evening at eight o’clock, as before in Beijing and Shanghai, thousands of people poured onto the streets in Chengdu and chanted: “We don’t want any Covid tests, we want freedom!” And then made the demand more precise : “Freedom of the press, freedom of expression!”

Scenes unheard of for the country took place in China over the weekend. The regime seems to have lost the people with its endless zero-Covid policy. But not only people want to finally break out of the impasse into which President Xi Jinping has maneuvered the country with his rigorous strategy of breaking the chains of infection with lockdowns and quarantine camps instead of arming the population with effective vaccines for life with the virus.

German companies are also groaning under the never-ending lockdowns that have been strangling China’s economy since the beginning of the year. For example, the Volkswagen Group is currently feeling the effects of the mass quarantine and the associated disruptions in the supply chain. According to the company, there is currently no production at the Chengdu plant due to “limited availability of parts and local health protection measures”. Jetta and Volkswagen models are affected.

Car production has come to a standstill

In the larger VW plant in Changchun, two of the five production lines on which models from the Audi and Volkswagen brands actually roll off the assembly line are idle. At other locations, the work is unchanged, but that could change quickly, reports one of those involved. “It only takes a single case of corona at a supplier to interrupt the entire supply chain.” There are also major difficulties in the VW dealer network, where more than 40 percent of the locations where VW models are sold are completely or partially parts are closed.

Mercedes-Benz also conceded new restrictions at the Beijing plant for the first time to the FAZ on Thursday. Production there is running, but “some trades” are temporarily closed due to the effects of Covid, the group said on request. In addition, sales are no longer running smoothly. In certain regions, the “retail activities” are affected, it said. The extent to which sales have therefore declined remained open at first. In general, it is difficult to make a sound assessment of the effects of Covid on business in China, the group said. The situation is reassessed every day.