BEIJING, (Reuters) – China’s main commercial center of Shanghai revealed a sharp decline in its economy in February. A COVID lockdown in Shanghai shut down factories and residents in the city. This raised concerns about foreign companies’ presence in China.

According to local statistics, output from Shanghai’s factories, which are located in the center of manufacturing in Yangtze River Delta shrank by 61.5% between a year ago and April 2013.

It was more severe than the 3.5% decrease in March, and it was also the worst monthly decline since 2011.

Shanghai houses 30% of China’s auto parts manufacturing capacity and 40% for its chipmaking capacities.

Though Shanghai’s COVID caseload is declining and Shanghai of 25 million inhabitants plans to return to normal in June, analysts warn of the ripple effects of the lockdown. They raise concerns about China’s involvement in global supply chain networks. Multinational companies may need to review their China-related operational risks.

Representatives from the European Chamber of Commerce in China stated that even if the lockdown was lifted in the next month, restrictions on international travel of Chinese citizens and the possibility of Omicron flare ups further are creating uncertainty.

Bettina Schoen Behanzin, vice-president of the chamber, stated that many companies and individuals have begun to seriously consider China as a potential location.

Shanghai’s retail sales dropped 48.3% in April. This is a steeper drop than the 11.1% nationwide and was the largest decrease since 2011, at least.

This led to a drop in overall sales of Yangtze River Delta retail, dropping by more than 30%.

In January and April, sales of property by floor area fell 17% compared with a growth rate of 4.0% over the previous three months. Based on four-month statistics, sales fell 88% in April, according to Reuters calculations.