Shanghai lockdown threatens to roil global economy

The city of Shanghai in China, the world’s main container port, is under lockdown due to COVID-19, a measure that disrupts the Chinese economy and threatens supply chains around the world.

To deal with the worst wave of COVID-19 that China has faced since the start of the pandemic, the country’s economic capital – with a Gross Domestic Product (GDP) equivalent to that of Poland – has been in full or partial lockdown for some time. two weeks.

Despite the fact that no deaths have occurred in Shanghai and the vast majority of cases are asymptomatic infections, the authorities decided to confine the nearly 25 million inhabitants, despite the high cost this implies for the economy.

Thousands of trucks are stranded as drivers entering the city must quarantine for two weeks to leave.

The lack of truck drivers affects the activity of the port, although the authorities affirm that for now there are less than a dozen ships per day waiting to dock.

“But the problem is that, due to the restrictions imposed on truckers, the port does not really work”, explained Bettina Schön-Behanzin, vice president of the European Union Chamber of Commerce in Shanghai.

The commercial representative indicated that she heard that the volumes fell by 40% in a week at the port. “This is a huge thing,” she said.

Neither workers nor raw materials

The effect is starting to be felt across China, where delivery delays are multiplying on online trading platforms, especially for imported products. Some industries are forced to find new suppliers.

But this impact could also be felt internationally since the port of Shanghai represents 17% of the Chinese maritime tonnage. Any disruption is going to slow down trade in the world’s biggest merchandise exporter.

Entrepreneurs affirm that the confinements that take place from one place to another in the country seriously affect their activities.

“Not all professions can work at home”, said Jason Lee, founder of a wheelchair company called Megalicht Tech, whose factory in Shanghai is closed.

The epidemic could affect the growth targets of the Chinese government, which expected an expansion of 5.5% this year, the lowest figure in 30 years.

adapt to survive

Entrepreneurs try to adapt to survive. Gao Yongkang, director of the Qifeng Technology company in Quanzhou, in the east of the country, can no longer deliver orders to his regular customers, so he converted to selling protective suits.

Others manage to switch providers. “It is a little more expensive and less effective”, confessed Shen Shengyuan, vice president of New Yifa Group, a diaper manufacturer.

Eric Zheng, president of the American Chamber of Commerce in Shanghai wonders if the zero covid strategy is still working in the current context.

“That is the big question, especially when one puts it in the balance with the economic cost that it entails.”, he stated.