BEIJING (Reuters – China’s Shenzhen, the manufacturing capital of China, is slowly getting back to normal after it was hit hard by recent COVID-19-related outbreaks. But many smaller companies are concerned about their short-term prospects, as uncertain demand has caused uncertainty, Securities Times reported.

Shenzhen’s “war” on COVID-19 is causing serious damage to up to 93% local small and mid-sized enterprises surveyed in the state-controlled paper. Some of these companies are experiencing production disruptions from shutdowns, interruptions to supply chains and delays in order executions.

Shenzhen’s factories and businesses were allowed to resume operations March 21, when the authorities had declared that the current outbreak was under control.

Following a rise in cases, three rounds were conducted in mass testing.

Although these outbreaks were small by international standards and Shenzhen authorities quickly took action to put in place measures, including the shutdown of businesses under China’s zero-COVID “dynamic” policy.

According to the Securities Times Survey, 93% said that the epidemic had increased their operational expenses including labor and logistics costs.

Half of the companies had between 100 and 500 employees while 26% managed a workforce of more than 500.

They said that their problems were compounded by the difficulty they had in obtaining financing.

The newspaper highlighted a more serious concern than the immediate effect of the shut downs on the demand. It cited a COVID-19-related “profound” effect on Chinese market demand.

Companies have complained of changes in consumers’ behavior, from delayed surgical procedures to the purchase of mobile phones.

The COVID-related pain is expected to be reflected in data on China’s services and factory sectors for March.

Since then, China’s COVID control efforts have moved to Shanghai. Shanghai is home to 26 million people and faces its most severe flare-up in years.

Beijing pledged to stabilize economic growth during the year in which President Xi Jinping will be expected to win a third term in the fall to become the leader of the once-in five-years Congress of the ruling Communist Party.

Nomura stated that Beijing has called for the minimization of economic costs of its zero-COVID strategy on occasion. However, local officials have been increasing mandatory mass testing and social distancing to avoid being charged with dereliction.

The result is that China’s economy has been under the greatest pressure since spring 2020.

This story corrects a typo at paragraph 12.