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Apple is to start making iPhone 14s in India, amid growing criticism over the economic and human costs of Beijing's strict COVID-zero policy.
Key points:
- Apple is expected to move 25 per cent of iPhone production out of China
- A prominent Chinese commentator has joined a growing number of Chinese questioning the COVID-zero policy
- It remains unclear how long Beijing will maintain the policy
Most of Apple's smartphones and tablets are assembled by contractors with factories in China, but in 2020 the company started asking them to look at moving some production to South-East Asia or other places after repeated COVID-19 shutdowns disrupted its global flow of products.
"We're excited to be manufacturing iPhone 14 in India," Apple said in a statement on Monday.
Apple hasn't released details, but news reports say the company also plans to set up assembly of tablet computers and wireless earphones in Vietnam.
Other companies are keeping or expanding manufacturing in China to serve the domestic market while shifting export-orientated work to other countries due to rising wages and other costs, as well as the difficulty for foreign executives to visit China due to anti-COVID-19 travel restrictions.
'It's all connected'
Professor Yang Dali of Chicago University, who writes on Chinese politics and economics, said the country was already paying a significant economic cost for COVID-zero.
China's positive GDP figures did not fully reflect the pain the country's economy was going through, Professor Yang said.
"Tourism, for example, has been decimated," he said.
"A lot of the businesses requiring human contact have been severely impacted and the unemployment rate is very high as well.
"It's all connected."
Public criticism of Beijing's policies is rare, but Chinese think tank the Ambound research centre issued a report recently saying China's COVID-zero policy must change to prevent an "economic stall".
The report was later censored.
"People who lose their businesses cannot pay their mortgages, which also causes contraction in the property sector, which has an impact on the market," Professor Yang said.
"It's actually fairly widespread."
Professor Yang said the uncertainty caused by lockdowns hanging over businesses and individuals was the most concerning part of COVID-zero.
"And most people have recognised COVID-zero is actually very much a political commitment on the part of the current leadership in China," he said.
Apple to move 25pc of iPhone production out of China
Apple has bet big on India, where it first began manufacturing its iPhone SE in 2017, and has since continued to assemble a number of iPhone models there.
The India-produced iPhone 14s will be shipped out by Foxconn, a major iPhone assembler whose facilities are on the outskirts of Chennai in southern India.
Apple is likely to shift about 5 per cent of its iPhone 14 production to India from later this year, raising it to 25 per cent by 2025, according to a JP Morgan report quoted by the Press Trust of India news agency.
The analysts expect that nearly a quarter of all Apple products to be manufactured outside China by 2025, compared to about 5 per cent now.
Supply chain risks like the stringent COVID-19 lockdowns seen in China are likely the trigger for such relocation efforts that will continue over the next two or three years, the report said.
"Apple has been trying to diversify its supply chain for a while, but these efforts have grown in the last two years over trade sanctions between the US and China," said Sanyam Chaurasia, an analyst at Canalys.
Criticism of COVID-zero rising
China has significantly tightened its COVID-19 policies this year to contain the spread of the highly transmissible Omicron variant even as its death toll since the pandemic began remains low — around 5,226 as of Saturday — and as many other countries relaxed tough restrictions.
Experts say while public dissatisfaction has so far not been enough to compel the government to end COVID-zero measures, it continued to grow.
"The same policies have been repeated over and over again in so many different places, in Wuhan in 2020, Shanghai earlier this year, and Chengdu [this month], so people can't help but notice when the same things happen again and again," said Singapore Management University law professor Henry Gao.
Professor Gao said while the economic pain was great, the most significant cost for China to sustain the policy was the ongoing humanitarian crisis.
"There might be some long-term effects on economic development and the environment, but in the short term, people's freedoms are restricted, and people's health and life are threatened by the policy," he said.
Earlier this month, the Chinese public expressed shock after a bus carrying 47 people who live in a "high risk area" in Guizhou overturned on its way to quarantine hotels, leaving 27 dead and 20 injured.
"Who said we're not on that bus late at night, we're clearly all there," commented a user on social media.
Two weeks before, people in a locked-down city in Sichuan province were reportedly trapped in their homes during a 6.8-magnitude earthquake.
Shortages of food and access to medicine and other medical treatments have been reported repeatedly during lockdowns in Shanghai, Sichuan, Xinjiang and elsewhere.
'Experts must speak out'
Prominent Chinese commentator Hu Xijin said on Sunday that as China ponders its COVID-19 policies, epidemic experts need to speak out and China ought to conduct comprehensive research and make any studies transparent to the public.
"The people must trust the state, but the state must also trust the understanding of the people," Hu said.
Mr Hu's unusual call on Chinese social media for candour and transparency earned him 34,000 likes on the popular Twitter-like microblog Weibo, as well as frank responses from netizens in a normally tightly-policed internet quick to censor voices deemed a risk to social stability.
China's top leaders warned in May amid the COVID lockdown of Shanghai and widespread restrictions in the Chinese capital Beijing that they would fight any comment or action that distorted, doubted or repudiated the country's COVID policies.
"About the future, China needs very rational research and calculations," said Mr Hu, former editor-in-chief of nationalist state tabloid Global Times.
"Experts must speak out, and the country should organise comprehensive studies and make them transparent to the public: what are the pros and cons for our common people, and what are the overall pros and cons for the country?"
When will COVID-zero end?
Professor Yang said the COVID-zero policy was a key issue for the China's leaders.
He predicted that even though public dissatisfaction was rising, there would be no major relaxation of the policy, at least in the short term.
"Many local governments probably would prefer not to do what they are doing, especially dragging people into quarantine, in the depths of night," he said.
"It really puts a lot of people in very challenging situations but, fundamentally, this is a political and national policy."
Professor Gao said the costs would eventually become to great to bear.
He said the COVID-zero policy had emptied the coffers of many local governments and started to take its toll on the central government as well.
"As [the Chinese government] review the financial statements in preparation for the NPC [National People's Congress] in March, they will realise the high costs and have to do something to stop the policy from draining the budget," he said.
He suggested President Xi Jinping might declare victory in the battle against COVID before then.
"He has done similar things in the past such as the abrupt crack-down on the tech sector and the tuition businesses," he said.
ABC/Reuters