For people not in public sectors, application for passports are okay-ish.
For others, I can only speculate. Most of the public sector workers already have passports from years ago. I don’t know if they have any kind of restrictions on new applications. To me, the Immigration Administration of the Ministry of Public Safety (who issues passports) feels more like a “routine” type of branch of the central government, but I could be wrong.
It really is like that. I found a report on People.cn from 2015. I guess it’s just the impact range is expanding. Personally I only heard of people experiencing this post-covid.