Officials said Anxin county, in Hubei province, would be “fully enclosed and controlled”, with only essential workers allowed to leave their homes and one member of a household allowed out once a day to shop for necessities.
Officials have warned anyone breaking the rules will be punished by police, according to the BBC.
Anxin, a part of the Xiongan New Area launched in 2017 to provide living space for Beijing, has seen 18 cases since the recent surge of cases in the Chinese capital about 100 miles away, according to Chinese media.
China reported 12 new confirmed Covid-19 cases on Sunday, down from 17 reported a day earlier as Beijing tries to curb a new wave of infections that emerged from a wholesale market in mid-June.
The National Health Commission (NHC) said in a statement five of the new Covid-19 cases were imported infections involving travellers from overseas, compared with three such cases reported a day earlier. The seven local infections were all in Beijing.
Beijing had tested about a third of its population as of noon Sunday as part of the city government’s efforts to ensure the outbreak that emerged from the Xinfadi market did not spiral out of control.
A total of 311 people in the city, which has a population of more than 20 million, have tested positive for the virus since the first case linked to the market was reported on 11 June.
The NHC also reported six new asymptomatic cases as of the end of 28 June, compared with seven such cases a day earlier.
The total number of Covid-19 cases for mainland China now stands at 83,512, while the total death toll remained unchanged at 4,634.
Additional reporting by Reuters