Lockdown in Shanghai: Opening and Return to Normality

Previous regulations on the resumption of work and production

During the month of May, the Shanghai government had already issued numerous measures and guidelines to ensure the rapid and safe resumption of operations in various sectors. Thus, these sectors were gradually allowed to resume operations, but usually under very demanding conditions (see, for example, the Guidelines for the Resumption of Work of Industrial Enterprises in Shanghai). Accordingly, surveys of various foreign chambers of commerce showed that their member companies are either unable to restart operations or face numerous problems after successfully restarting operations, which are directly related to the "closed-loop" concept required by the government (e.g. material shortages, lack of personnel, hygiene and occupational health and safety concept that is difficult to implement). But also companies from sectors other than industrial manufacturing have so far either not made use of the possibility to return to work at all or have done so only very reluctantly. High government requirements and physical barriers due to the city-wide lockdown were the most significant hurdles. For example, it seemed to be very difficult for workers to present a valid PCR test within the last 48 hours, in accordance with the previously applicable regulations. However, this was previously mandatory in order to enter public facilities such as buildings, public transport or even one's own neighborhood.
 

Changes with effect from 1 June 2022

For city's residents, first have already been made improvements in terms of freedom of movement and opportunities to participate in public life . All areas with a low risk level will be opened immediately and administrations of the respective residential areas are explicitly prohibited from setting up access barriers of any kind for residents. An important exception is the requirement to have an up-to-date PCR test before entering public facilities, places and buildings (including residential areas). This test must be no more than 72 hours old, which is a slight improvement over the previously required 48 hours. For travel from Shanghai, either a negative PCR test report within the last 48 hours combined with a negative antigen test within 24 hours or, alternatively, a negative PCR test report within the last 24 hours must still be presented. For travel to Shanghai, a negative PCR test report within 48 hours is mandatory. For the purpose of "normalized" testing, about 15,000 mobile testing stations have been set up citywide to facilitate smooth testing. This does not seem to work optimally during the transition period, as long queues form in many places and the waiting time is very long. The areas within the city with “lockdown”, “controlled”, “medium risk” or “high risk” status are excluded from the opening for now and the previous restrictions apply.
 
All public transport has been almost fully operational since 1 June 2022. For the time being, a special permit is still required to leave the city by road.
 

Industrial Enterprises

There will be significant changes for industrial enterprises. The 3rd and latest edition of the “Guidelines for the Resumption of Operations of Industrial Enterprises in Shanghai”, published on 31 May 2022, is now intended to adequately reflect the changed course towards opening up, stabilizing and strengthening the local economy. One of the most important changes is the abolition of the requirement to obtain a permit to resume operations. The obligation to apply for an electronic passport for employees and vehicles (通行证) has also been abolished.
 
Instead, all industrial enterprises are now to be treated equally in principle and only in exceptional cases are certain areas or sectors on a negative list to be subject to special requirements. Companies still have to have a comprehensive hygiene and occupational health and safety concept ready and implement corresponding measures in the business premises. However, the severity of the requirements has been significantly reduced. For example, the business premises no longer have to be subdivided according to a colour code (green, blue, yellow, red), but rather according to the actual conditions and risk areas in the company. Also, closed-loop operation is no longer mandatory. Companies must instead - in accordance with city-wide regulations - set up strict access controls in the form of scanning a QR code (场所码) specially created for the company or a newly introduced device for scanning the personal health code as well as for temperature measurement (数字哨宾) and ensure other hygiene measures (mask requirement, disinfection, etc.). In terms of logistics, the relaxations only apply to inner-city transports. For inter-provincial deliveries, the application for a special passport will still be required.
 
To help businesses sort through the regulations that have been issued since the start of the lockdown, the Shanghai government has set up a quite useful platform called “EasyServe” (益企服). This mini program, which can be accessed via the WeChat app, provides a good overview of national, city-wide and district-specific regulations and also contains helpful information on work resumption and other aspects relevant to businesses during these special times.
 
Finally, Shanghai will come to the aid of the weakened economy with a significant rescue package. The details of this “Action Plan to Accelerate the Recovery and Revitalise the Shanghai Economy” can be read in our article “Easing of the Lockdown and Accelerating Relief for Enterprises ”.
 

Outlook

Shanghai is slowly moving back towards normality after a seemingly never-ending lockdown. Even though recent developments give good reason for hope for the city's residents and businesses, this should not be viewed too euphorically. According to official statements, there is always the risk of another outbreak, which under China's zero-covid policy will continue to be answered with isolation and lockdowns, although probably not to the extent of the last two months.  On the other hand, the tone of the latest measures and regulations clearly indicates that the government has become aware of the enormous economic damage, both in the short and long term, and is now working harder to avoid an exceptional situation like the recent lockdown. Although China is aware of its currently still prominent position in global value creation, the state will undoubtedly be watching closely as the patience of the economic community at home and abroad slowly reaches its limits.