Experts Warn China’s Lockdowns Will Once Again Cripple Global Supply Chains

Ketan Mahajan
Ketan Mahajan

Updated · May 10, 2022

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There are 373 million people in cities that be roughly 40% of China’s GDP have been impacted by the most recent wave of lockdowns across China. The strict lockdowns were released in some residents worried for food and led to viral videos of Shanghai residents shouting from the windows of their apartments. What happens in China isn’t likely to stay there? Global supply chains are set to take a hit, and the president of China, Xi Jinping is trying to bring down the country’s zero-COVID approach.

Air and ocean ports are available, and the shutdown length could make this iteration the most significant logistics disruption since starting of the pandemic, the shipping company Freightos said in an update to clients this week. After all, Shanghai is known as the world’s largest port, and although it has largely remained open, trucks face problems unloading cargo due to strict permit regulations, which causes a staking up of shipping. That’s rough news for the Consumer of America. The U.S. imported more goods from China than any other country in the past decade.

In 2020, the U. S imported $435 billion worth of goods from China and exported $125 billion to China once lockdowns were over, a ‘devastating movement of goods’ that crippled supply chains. CEO of the shipping industry Lars Jensen, adviser of Vespucci Maritime, said that he doesn’t see any immediate end to production and logistics disruptions in China either.

In Shanghai supply-chain situation continues to worsen. For some types of cargo, the port is running out of capacity, and importers cannot collect their goods. With the outbreak in Guangzhou leading to shutdowns, the impact on export volumes from out of China will grow larger. Investment banks are also discussing the potential impact of the strict lockdowns in China. UBS said even more areas have initiated “de facto lockdowns” since finding COVID-19 cases. On a note, GDP Growth will be decreasing in china.

In April, Logistics problems were more widespread, production disruptions in multiple industries are leading.” Tao Wang, an economist and UBS team leader, wrote. “In April, this could impact China’s trade more significantly.”

The economists believe the Chinese government is not likely to adjust its current policy, even if officials are working to reduce production disruptions, transport, and blockages, meaning supply-chain chaos can continue in the near term. The effects of the extensive lockdowns in China are already being felt in Europe. The organization sent a letter to the Chinese government urging officials to revise their policies last week, arguing the effects of the lockdowns have already begun to affect European suppliers. The German Chamber of Commerce in China surveyed in the first week of April found that roughly half of the German companies’ logistics, warehousing, and supply-chain operations were “wholly disrupted or severely impacted by the current COVID-19 situation in China.

Ketan Mahajan

Ketan Mahajan

Hey! I am Ketan, working as a DME/SEO having 5+ Years of experience in this field leads to building new strategies and creating better results. I am always ready to contribute knowledge and that sounds more interesting when it comes to positive/negative outcomes.