Martin Quin Pollard and David Stanway

SHANGHAI/BEIJING – Tesla (NASDAQ) had its Shanghai plant operating at a low capacity Tuesday. This is a sign of the difficulties factories face when trying to increase output in China under tightening COVID controls. Meanwhile, Beijing, China’s capital, continued fighting a tiny, but persistent, outbreak.

Many of the many companies that have reopened factories in Shanghai over recent weeks are having difficulties getting their production lines up and running while maintaining a closed loop system for workers.

Even though they do everything perfectly, these firms are dependent on their suppliers who face similar problems.

Tesla’s Shanghai plant is the latest evidence of difficulty in increasing production under COVID rules. Three weeks ago, it received wide coverage from state media. The example of what can be done despite constraints was shown by its resumption.

A memo inside Reuters states that the U.S.-based automaker stopped most of its production in this plant because it had difficulty securing spare parts.

Tesla planned to raise production to pre-lockdown levels next week as recently as last week.

Aptiv (NYSE) is among the Tesla suppliers currently in difficulty after several infections were reported by its workers, sources claimed on Monday.

Last week’s videos showed many workers from Apple (NASDAQ) and Tesla Supplier Quanta overpowering hazmat-suited security officers and climbing above factory gates in fear of being caught inside.

China’s second-largest economy is suffering from COVID restrictions in Shanghai and Beijing, as well as dozens of manufacturing centers and major cities across China. There are significant international spillovers to trade and supply chain issues.

China’s economic outlook remains uncertain. Economists are unable to predict with accuracy when COVID could be brought under control, for how long and at what cost.

Fathom Consulting analysts stated in a note that “Growth China will likely remain hostage to this pandemic course for most of 2015,” they said.

On Tuesday, the Chinese market had another difficult day.

Shanghai, with 25 million inhabitants, is an important centre for finance, commerce and manufacturing, but was locked down for six weeks.

This is a result of the imposed isolation that has been lasted for so long. It makes it difficult to connect with the outside world, which slowly returns to pre-COVID life.

China threatens to sue critics of its COVID policy (dynamic-zero COVID), which it claims aims at “putting life first” and preventing the millions of deaths from the virus.

‘CRITICAL PERIOD’

Although the number of COVID-19 new cases has been declining for nearly two weeks in Shanghai, they still exceed thousands.

Sun Xiaodong is the deputy director at the Municipal Centre for Disease Control.

The city was trying to stop infections in areas that are not under its control.

Although there wasn’t an official announcement made, residents in many compounds were notified that they would not be permitted to leave after being allowed to walk or go grocery shopping for a short time.

Some cases saw entire towns being placed in quarantine after one neighbor tested positive. Shanghai residents are required to perform a quick antigen test in their homes before they can do the compulsory community PCR test.

Many people in Beijing also test every day.

Since the outbreak on April 22, its daily number of cases has not exceeded several dozen. It has found it hard to reduce them significantly.

So the restrictions gradually became more restrictive.

Residents were prohibited from leaving the area to which they live in southwest London on Monday. They also had to stop all virus-related activities.

Residents were instructed to work remotely elsewhere; restaurants banned from serving dine in; some parks and malls were closed; and public transport was shut down for a large portion.