Shanghai's grinding coronavirus lockdown is slowly clogging China's supply
chains, as delays hit the world's busiest container port where staff are
tangled in a morass of
Covid controls.
اضافة اعلان
Beijing has refused to tack away from its strict zero-Covid strategy that
has protected its public health system through the pandemic but at a mounting
economic cost.
China's financial hub Shanghai -- home to multinational firms and its
busiest port -- has been sealed off almost entirely for a week following an
outbreak fuelled by the Omicron virus variant.
That has forced many companies to halt production and slow new projects,
factories told AFP, while those still operating are struggling with a shortage
of truck drivers on top of onerous permit and Covid testing requirements.
At Shanghai's port, the lack of drivers and other workers means getting
goods in and out is increasingly hard.
The docks are working normally with a "single-digit" number of
vessels waiting to berth, Shanghai International Port Group said this week.
"But the fact is... due to restrictions caused for truck drivers, it is
not really operating," Bettina Schoen-Behanzin, vice president of the EU
Chamber of Commerce's Shanghai Chapter, told AFP.
"The figure I heard is that... week-on-week volumes at the Shanghai
port are down by 40 percent. So that's really enormous."
Shortages are starting to bite across China's vast consumer economy, where
online shopping platforms such as Taobao face delivery delays, especially of
imported goods.
Covid curbs in a number of cities have forced factories to find new
suppliers.
But the impact may soon also be felt outside China if lockdowns persist.
Shanghai is the world's number one container port, a spinal point in the
global supply chain and a key gateway for foreign trade.
It handles around 17 percent of China's total port volume and shipped 47
million TEU -- the standard measurement for cargo, meaning Twenty-foot
Equivalent Unit -- in 2021.
- Factories can't
work from home -
Chinese manufacturers say lockdowns, no matter how flexible or targeted,
pile pressure on their business.
"Not many roles allow working from home," said Jason Lee, founder
of wheelchair producer Megalicht Tech, whose factory in Shanghai's Puxi area
has suspended production.
"People can't enter the factory... and because our raw materials come
from other provinces or cities, these can't enter Shanghai either," he
said.
A Shanghai-based clothing exporter surnamed Zheng said his biggest problem
was that he could not send samples to clients.
"Deliveries can neither leave nor enter," he said
Experts say the outbreak is currently nibbling at growth, but could soon
take a big bite.
Nomura economists estimate that 23 cities accounting for 22 percent of
China's GDP have rolled out full or partial lockdowns.
"The costs of the zero-Covid strategy will rise significantly as its
benefits decline, especially as exports are hit by the ongoing lockdowns,"
Nomura chief China economist Lu Ting told AFP.
That will challenge Beijing's 2022 GDP growth target of around 5.5 percent,
he added.
- Adapting to
survive -
For now, companies are adapting to try and handle the restrictions.
"Our main business activity is down by over 50 percent," said Gao
Yongkang, general manager of Qifeng Technology in eastern China's Quanzhou
city.
The company has been unable to transport textile materials to regular
clients because of the Covid curbs, and has instead pivoted to supplying the
booming market for protective gear.
Meanwhile, those who cannot reach their original suppliers are scouring for
new ones.
"The costs are a little higher and it's slightly less efficient but we
can fulfil our regular needs," said Shen Shengyuan, deputy general manager
of diaper-producer New Yifa Group.
In a nod to struggling industries, Premier Li Keqiang this week announced a
temporary deferment of old-age insurance premiums for sectors such as catering,
retail and civil aviation.
But industry groups say hard lockdowns on major cities such as Shanghai are
unsustainable, especially with many Omicron cases presenting light or no
symptoms.
"Does the zero-Covid strategy still work in the current
environment," said Eric Zheng, American Chamber of Commerce president in
Shanghai.
"That's a big question, particularly when you try to balance the
economic cost."
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