For the past six weeks, Zhao Xubing has been mostly confined to his home in Zhangjiagang, a county-level city of 1.4 million people in eastern China’s Jiangsu province. The truck driver, who earns 5,500 yuan (US$818) a month delivering fabricated metal products between Zhangjiagang and nearby cities such as Kunshan and Taicang, was ordered to stay home to test for Covid-19 every three days, as the Yangtze River Delta area has been caught up in Shanghai’s lockdown since April 1. Zhao, his wife and their son have consistently tested negative for Covid-19, even though the highly transmissible Omicron variant had infected more than half a million Shanghai residents since March 1 – though most were asymptomatic – as the virus raced its way through China’s commercial hub. Still, Shanghai’s citywide lockdown and partial shutdowns in the Yangtze River Delta forced one of China’s biggest and most vibrant manufacturing regions to a halt, and there has been barely any work for Zhao. Shanghai’s lockdown has upended tens of thousands of businesses in the city of 25 million residents, from corner stores and restaurants to multinational investors like Tesla and General Motors. City authorities have allowed more than 2,000 manufacturers to resume work since late April under so-called closed loops, where workers have to undergo daily nucleic acid tests and sleep on-site to ensure zero contact with outsiders. The draconian measures idled most factories, as few assemblers could accommodate more than a fraction of their workers on site. A survey of 667 public companies operating in the Yangtze River Delta found around half of them operating at less than 30 per cent capacity, according to a report earlier this month by state-owned Shanghai Securities News . More than 70 per cent of respondents said “hindered logistics and broken supply chains” were the main issue preventing them from fully resuming business. A survey of 667 public companies operating in Yangtze River Delta found around half of them operating at less than 30 per cent capacity, according to a report by state-owned Shanghai Securities News. Tesla had to shut its Gigafactory 3 in Shanghai this week , its second shutdown since March, as partial lockdowns among its vendors around the Yangtze River Delta caused shortages of components for its electric cars. The shutdowns around Shanghai are so serious that the entire industry in the world’s largest vehicle-producing nation could stop altogether by May, according to a blog last month by He Xiaopeng, co-founder of his namesake electric car start-up Xpeng. “The effect of policy interventions, even if confined to a single locality, will spill over into all the other connected areas through economic linkages,” researchers from the Chinese University of Hong Kong, Tsinghua University, Zhejiang University and Princeton University wrote in a recent paper. The study, updated in late April, found that a month of full lockdowns in China’s top four cities – Shanghai, Beijing, Guangzhou and Shenzhen – would reduce the national real gross domestic product by 8.6 per cent, 11 per cent of which would be the result of spillovers to other cities. The impact of Covid restrictions extends beyond the vehicle manufacturing industry. Jiangsu province is home to several of the world’s largest electronics producers, many of them headquartered in Taiwan – such as Quanta Computer, BenQ Corp, Asus and Foxconn Technology Group – but with factories in Kunshan, just west of Shanghai. Foxconn, the world’s largest contract manufacturer and the assembler of Apple’s iPhones and iPads, had to suspend production at two factories in Kunshan after finding infections among its workers in late April. Zhao said he had barely worked since delivering his last load to Jiangyin on April 1, a distance of about 35 kilometres on the highway from Zhangjiagang. He was not alone: five colleagues had also been ordered to stay home, as health authorities in Suzhou – the administrative capital of several counties including Zhangjiagang – enforced strict health measures to track down and isolate every Covid-19 case they could find. As of Wednesday, Shanghai’s cumulative Covid-19 cases in the latest outbreak reached more than 610,000, while Jiangsu province had fewer than 3,500 infections. The unprecedented logistic disruptions are worse than in 2020, when the first Covid-19 cases were reported in China, said Xu, the general manager of a family-owned metal products factory in Zhangjiagang, who agreed to be identified by only his surname for fear of government reprisal. Trucks used to come in and out of the factory almost every day, carrying base plates, fasteners and other metal parts to be exported to Japan and the United States for use on metal scaffoldings at construction sites. The flow has ground to an abrupt halt since March, after logistics connecting Zhangjiagang with Shanghai and the Yangtze River Delta were gummed up by stringent Covid-19 prevention measures. Xu’s parents, former workers at a state-owned enterprise, founded their factory two decades ago, soon after China became a member of the World Trade Organization in 2001. The factory, like Xu himself, prospered during the golden era of China’s economic transformation, when the nation’s growth averaged 8.7 per cent every year from 2001 to 2020, boosting China’s annual exports 10-fold to 21.73 trillion yuan at the end of last year. China came to be known as the world’s factory , and Xu’s family workshop was one of the millions of cogs in that gigantic manufacturing powerhouse. As business disappeared under China’s Covid-19 shutdown, Xu spends most of his time filling out firms to comply with anti-Covid measures imposed by local authorities, while still trying to fulfil orders despite mounting production costs and logistic challenges. “We are having the lowest level of shipments in history,” Xu said. On Thursday, the company sent out its first load to Japan in around seven weeks, with shipping costs having nearly doubled – an expense that the factory absorbed, he said. A fan of Japanese pop culture and Marvel superheroes, Xu’s office is decorated with toys and other cherished collectibles. His factory, which employs around 70 people, produces hardware for clients in Japan and the United States, which use them in civil engineering and infrastructure projects. In 2020, Xu’s factory and all plants across China were ordered to stop operations for a week after the Spring Festival to contain the spread of the coronavirus. “We resumed work right after, and there was no issue with raw materials or shipments back then,” he said. Two years later, there is still no end in sight for the strict Covid control measures. Infections in Suzhou flared up on Valentine’s Day, and again in mid-March. That was when Xu began to struggle with logistics. Jiangyin, a neighbouring town administered by Wuxi city that is the base of Xu’s long-time supplier, started to impose a so-called “3+11” policy requiring three days of home quarantine for any visitors from Suzhou, followed by 11 days of self-monitoring. Zhangjiagang enforces the same rules for visitors from Jiangyin, meaning that people travelling between the two towns have to stay out of work for two weeks after entering each other’s territory. It is a hassle that few drivers are willing to take. Following a coronavirus outbreak on May 3, Jiangyin this week imposed citywide traffic restrictions that cover all residents, except for essential workers and businesses. Cut off from Jiangyin, Xu’s factory has been unable to fulfil orders. The company’s products require a layer of zinc coating to prevent rusting, which is applied by Xu’s partner there. In the past, a truck would stop by the plant every day or two to unload galvanised hardware and pick up unfinished products. Now, crates of bare hardware sit next to workers attached to their factory stations, as they continue to stamp steel plates, weld small parts together, and monitor robot arms, in hopes that travel restrictions would ease soon. He recently found a supplier in Suzhou-administered Changshu, but the cost is 40 per cent higher. Meanwhile, access to raw materials remains an issue. “We cannot get raw materials even when they’re locally sourced,” Xu said, adding that the plant is currently running on leftover stock from previous orders. Xu’s office is conveniently located a 15-minute drive away from the raw material supplier ZPSS, a joint venture between South Korea’s POSCO and China’s second-largest steel manufacturer Jiangsu Shagang Group Co , but the short distance has not translated into accessibility. “We cannot use ZPSS stainless steel plates because they are too big, so we normally need an intermediary service provider to cut them into usable sizes,” Xu said. That procedure is usually done in East Steel City in the nearby city of Wuxi, the largest one-stop market for steel-related services in the Yangtze River Delta. Xu’s family and their business partners have tried to be flexible. Using Hong Kong-based logistics service platform Huolala, Xu found a driver for a round trip between Jiangyin and Zhangjiagang to pick up galvanised goods. However, he has not been able to find another driver since. As Xu and his peers trade logistics tips, he heard there are two kinds of truck drivers on the road: ones who are determined to earn an income during difficult times and practically live in their trucks, and others who can supposedly move through checkpoints faster by registering with companies on the so-called white list issued by the municipal Industry and Information Technology Bureau. In Xu’s experience, however, a white list does not guarantee efficiency. When he let a driver from Jiangyin travel under the name of the factory, the journey, which usually takes an hour and half, stretched to eight hours amid logjams and complicated Covid testing procedures. Some drivers prefer not to take new orders unless they have to. One thing that made Xu’s factory an anomaly is that its workforce remains stable, as most are local and long-term employees, he said. That is rare in the region as many factories have halted production altogether due to the lack of raw materials, said the manager of a small recruitment agency Zhongxing Human Resources located near Xu’s factory. The agency conducts business with factories nearby, including a large textile factory, a sock manufacturer and a few electronics manufacturers. Xu said while he considers logistics to be the main roadblock preventing his factory from functioning at full capacity, he is also concerned that his company would be held accountable for Covid-19 infections that happen in the factory. “Enterprises need to shoulder the main responsibility of pandemic prevention. In case of any Covid-related outcome due to inadequate management, the enterprise must bear the consequences,” reads the top measure in a government guideline. After the guideline came out in April, Xu became one of two anti-Covid representatives at his factory. Last month, he was trained to perform Covid-19 tests with a throat swab, something he is expecting to do frequently for his colleagues. Expenses aside, no one at the factory is actually adept at administering Covid-19 tests, disinfecting trucks, or even making sure that the ratio of disinfectant and water is correct, Xu said. “We are not professional medical staff; we are not fully confident in ensuring that nothing will go wrong,” he said.