Chinese City’s Time Off for Omicron Tests Shows Economic Risks

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The northern Chinese city of Tianjin -- one of the world’s biggest ports and a production hub for foreign businesses -- ordered a half-day break for Covid testing, the latest sign that China’s face-off with the omicron variant could disrupt vital supply-chains.

All government agencies and companies in the city will get a break on Wednesday afternoon while employees are asked to “remain still” for its second round of mass Covid testing, according to a notice issued by Tianjin’s municipal government. 

Some companies are already feeling the pressure as the northern port city scrambles to contain the spread of the ultra-contagious variant in the community. Toyota Motor Corp. has halted production in Tianjin since Monday in response to the municipality government’s move to test citizens for Covid-19, according to a spokeswoman.

Volkswagen AG has also suffered from shutdowns of its joint venture plants and key suppliers in recent outbreaks in Tianjin and another port city, Ningbo, in eastern China. 

Throughout the pandemic, Chinese authorities have resorted to widespread testing of millions, yet the rare announcement of a half-day break dedicated to testing underscores China resolve in sticking to its Covid Zero playbook against the omicron variant, which has been shown to cause fewer hospitalizations but spreads very swiftly. 

Worries are already growing that China’s lockdowns could hurt demand, and possibly ripple through the global economy, particularly hurting commodity exporters. Goldman Sachs Group Inc. this week cut its China 2022 economic growth forecast to 4.3% from 4.8% amid expectations of escalating curbs to counter omicron.

For more, read: What Could Possibly Go Wrong? Biggest Economic Risks for 2022

Tianjin is also home to a key assembly hub for Airbus SE, delivering aircrafts to airlines in China and the broader Asia region. Omicron has the potential to significantly change the picture in China, Airbus Chief Executive Officer Guillaume Faury warned earlier this week, though he said the company’s plant in the port city hasn’t yet been impacted. 

Tianjin port, the world’s ninth biggest by container volumes in 2020, told the state-run news service that Xinhua it’s operating normally while workers take turns to get swabbed for Covid this week. Still, China’s Covid Zero policies aim to stamp out every last infection, and local authorities across China have sometimes rolled out more than 10 rounds of mass testing in some parts of the country in the past. 

Health authorities in Tianjin discovered an infection cluster in the southern part of the city caused by the omicron variant. A total of 97 people tested positive in the city’s first round of mass testing of 14 million residents. 

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With assistance from Bloomberg