Worsening Covid Clouds China’s Economic Prospects

Beijing scrambles to contain the worst outbreak China has seen since Wuhan in early 2020, as daily infections surpass 5,000. Lockdowns in coastal cities, including the first imposed on Shenzhen, prompt warning that situation has ‘deteriorated at an alarming pace’, with big economic hit ahead.

China faces biggest Covid-19 crisis since Wuhan as cases surge. Despite China reporting upbeat economic data to start the year, a severe wave of coronavirus infections has added fuel to skepticism over the pace and effectiveness of its monetary-loosening plans.

China is also battling its worst outbreak since what was seen in Wuhan in early 2020, and the National Health Commission reported 5,154 infections on Tuesday, including 1,647 asymptomatic cases. Infections more than doubled from 2,125 a day earlier and brought the total caseload to more than 15,000 since March 1, across 28 provinces. The northeastern province of Jilin is the epicentre of the latest wave.

China’s coronavirus lockdowns could trigger ‘shock waves’ across global supply chains. Another major port lockdown in China could have a phenomenal impact on global supply chains still recovering from two years of pandemic-related setbacks.

Strict virus-containment efforts by local governments will weigh on cargo movement inside and out of China, while raising shipping prices.

Rising coronavirus cases in China, including in economic powerhouses Shenzhen and Shanghai, are stirring fears about severe disruptions to the global shipping industry and supply chain, according to industry insiders.

As the country grapples with its most severe outbreak since the initial wave in early 2020, Beijing has doubled down on its “dynamic zero-Covid strategy”, prompting local governments to impose stringent prevention measures, including lockdowns.

On Sunday, 19 out of 31 mainland provinces reported local infections, with recorded daily infections across the country reaching 2,243.

Experts have warned that strict containment efforts by local governments will weigh on cargo movement inside and out of the country.
Lockdowns in China will further reduce capacity and cause a surge in already inflated shipping prices. Lockdowns in China will further reduce capacity and cause a surge in already inflated shipping prices.

China’s tech hub Shenzhen in the southern province of Guangdong entered a de facto lockdown for this week, when three rounds of mass testing will be conducted. Local authorities in Shenzhen have ordered a halt to all non-essential industrial activities and public transport. Foxconn, a major Apple supplier, has already announced factory suspensions in the city.