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Omicron outbreak in China raises fears of more supply chain disruptions

Mar 21, 2022 China
Omicron outbreak in China raises fears of more supply chain disruptions
Chinese authorities are imposing new COVID-19 restrictions to fight the surge of Omicron-variant infections, which is raising concerns over further disruptions to the global supply chain
“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. The epidemic prevention and control is more difficult, and the situation is severe and complicated”, stated Mi Feng, a spokesman for the National Health and Health Commission, as quoted by New York Times. In most countries, the tally of new infections would not be considered a national emergency, but China follows a zero-tolerance approach to COVID-19 outbreaks, which demands for severe measures, such as strict lockdowns, mass testing and quarantines.

According to the New York Times, five large factory cities have completely shut down: Dongguan and Shenzhen in southern China, Changchun and Jilin City, in Jilin Province, and Langfang, next to Beijing. Other cities, such as Shanghai, have not yet declared citywide lockdowns, but have closed many neighbourhoods, shopping malls and industrial parks. Companies are temporarily encouraging employees to work from home as much as possible.

In addition, high international freight costs are becoming a serious issue once again. Ports in China are requiring workers to live and work at the docks for as long as two months at a time to prevent infections. However, if this measure has allowed ports to continue operating during sustained outbreaks, in contrast with the shipping delays last spring and summer, the delay of trucks, due to mandatory testing of drivers, is raising container rates.

The impact of the latest restrictions will most likely be felt beyond China’s borders, at a time when the global economy is already under strain over Russia’s war on Ukraine, surging oil prices and weak consumer demand.


Image Credits: wsj.com



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