China’s Covid Lockdowns Set to Further Disrupt Global Supply Chains – The New York Times

March 15, 2022 by No Comments

BEIJING — Trucks are being delayed by the testing of drivers. Container rates are rising as ships wait for many hours at ports. Products are piling up in warehouses.

As Chinese officials scramble to contain the country’s worst outbreak of Covid-19 since early 2020, they are imposing lockdowns and restrictions that are adding chaos to global supply chains. The measures in China, home to about one-third of global manufacturing, are disrupting the production of finished goods like Toyota and Volkswagen cars and Apple’s iPhones, as well as components such as circuit boards and computer cables.

Cases rose on Tuesday to more than 5,000 new infections nationwide. That tally is small compared to many other large countries’. But China has taken a zero tolerance approach to outbreaks that calls for stringent lockdowns as well as mass testing and quarantine in government facilities. Because several of the country’s largest industrial cities are now fighting outbreaks, such measures are taking a toll on the factory and transportation networks that are the backbone of China’s manufacturing.

Officials in Beijing and an ever-lengthening list of cities and provinces say that the virus is still spreading and that the government must take ever tougher measures to stop it.

“Recently, local clustered epidemics have occurred in many places in our country, mainly of the Omicron variant, which has spread quickly and is very hidden,” Mi Feng, a spokesman for the National Health and Health Commission, said on Tuesday. “The epidemic prevention and control is more difficult, and the situation is severe and complicated.”

In Jilin Province in China’s northeast, which has the biggest concentration of recent cases as well as many factories making cars and car parts, Zhang Li, a deputy director of the provincial health agency, said that residents and officials would have to “urgently mobilize and act to overcome difficulties with clenched teeth — we are racing against time.”

To some foreign investors, the outbreak itself may be less unnerving than the unpredictability of government measures. “The business risk in China now is higher than at any time since late spring 2020,” said Julian MacCormac, chairman of the British Chamber of Commerce in China.

Lockdowns have also suspended work at electronics factories in the south and a wide range of industrial companies in central China. Cities near Shanghai have closed highway exits or demanded that each driver show a negative P.C.R. test — requirements that have also created miles-long lines of trucks trying to carry crucial components among factories.

High international freight costs, a serious problem last year that has contributed to inflation in the United States, have begun climbing again after a dip during the Chinese New Year holiday last month.

The cost to ship a container of goods from Asia to the U.S. West Coast inched up to $16,353 as of last Friday, before the latest coronavirus restrictions took effect, compared to $16,155 a week earlier. Rates have almost tripled from a year ago and have risen 12-fold from two years ago, according to data from Freightos, a freight booking platform.

Updated 

March 15, 2022, 6:26 a.m. ET</…….

Source: https://www.nytimes.com/2022/03/15/business/covid-china-economy.html

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