Lockdown Fear Spreads to Beijing... Panic Buying Crisis Triggered by 'Shanghai Effect'

3.5 Million Residents of Chaoyang District Undergo Mass Testing
Beijing Lockdown Could Severely Impact Global Economy
Iron Ore Futures Plunge; Two Apple Factories Halt Operations

[Image source=Yonhap News]

[Asia Economy Beijing=Special Correspondent Jo Young-shin, Reporter Kim Hyun-jung] As fear of the Omicron virus spreads in Beijing, the capital of China, a panic buying frenzy for groceries has erupted. Due to concerns that Beijing may be locked down if COVID-19 cases increase, some fresh items such as meat and vegetables have sold out. This is a learning effect from the Shanghai lockdown.

In particular, amid fears of a Beijing lockdown, Singapore iron ore futures prices plunged by as much as 7.9%, with the whole world on high alert over whether COVID-19 will spread in Beijing.

According to Chinese media including the state-run Xinhua News Agency and Global Times on the 25th, a total of 21 new COVID-19 cases were confirmed centered around Chaoyang District in Beijing the previous day. Including 20 cases from the day before, 41 people tested positive over two days.

The Beijing Center for Disease Control and Prevention explained that as of 4 p.m. the previous day, a total of 21 new infection cases, including 5 asymptomatic infections, were confirmed centered around Chaoyang District in Beijing. The CDC designated the area as a high-risk zone and additionally designated one more area as a medium-risk zone. Other areas in Beijing were classified as low-risk zones.

Beijing authorities will conduct nucleic acid testing for COVID-19 on all 3.5 million residents of Chaoyang District starting from the 25th. They plan to conduct three tests per person over the course of a week. As soon as news of the high-risk and medium-risk area designations spread, panic buying occurred in nearby areas. Global Times reported that some fresh groceries such as meat, vegetables, and fruits were sold out at large supermarkets in parts of Chaoyang District.

Online orders also surged. Orders for fresh products such as meat, eggs, milk, vegetables, and fruits increased by more than 50% compared to usual. With so many orders pouring in that delivery drivers became insufficient, online delivery platforms such as Hema and JD 7Fresh began accepting next-day pre-orders starting on the 25th.

Zhao Weidong, Deputy Director of the Beijing Municipal Bureau of Commerce, said, "We are working to ensure stable supply and price stability of fresh items such as meat and vegetables." The chaos in Beijing caused by 41 confirmed cases stems from fear of lockdown. Beijing citizens have witnessed how the logistics system was paralyzed during the Shanghai lockdown, causing 25 million people to suffer from hunger.

[Image source=Yonhap News]

Global Times quoted a quarantine official as saying that whether the entire city of Beijing will be locked down or only some areas will depend on the results of this week’s COVID-19 nucleic acid tests. This means there is a possibility of strong measures such as lockdowns depending on the situation.

The decision on whether to lock down Beijing is expected to be made based on this week’s test results. If Beijing is locked down (including partial lockdown), it is highly likely to have a negative impact not only on China but also on the global economy.

In fact, as the possibility of a Beijing lockdown was raised, iron ore futures prices plummeted. Bloomberg reported that as of 7:38 a.m. local time, iron ore futures on the Singapore Exchange were trading at $138.90 per ton, down 7.9% from the previous trading day. Bloomberg said futures prices fell sharply due to concerns that iron ore demand would decrease if Beijing is locked down.

There is also analysis that Beijing’s economy is being affected by the spread of COVID-19 in other regions such as Shanghai. Beijing’s GDP growth in the first quarter was only 4.8% year-on-year. The economic growth target for Beijing this year is around 5.5%.

Apple’s largest contract manufacturer, Foxconn, has also suspended operations at two factories in eastern China, putting Apple’s supply chain in China on alert. On the same day, Hong Kong’s South China Morning Post (SCMP) reported that due to the spread of COVID-19 in Kunshan City in eastern China, the Denpa and Fuhong factories in the northern part of the area were closed.

SCMP cited an anonymous factory worker saying that COVID-19 cases were confirmed at the related factories and that operations had already been suspended since the 20th. These factories in Kunshan account for about 20-30% of total iPhone production.

This content was produced with the assistance of AI translation services.