$7.2 trillion of Chinese GDP in lockdown

Image source: AP

People wearing face masks to protect themselves from the coronavirus walk past a wall with propaganda posters as they go to work in the Central Business District during the morning rush hour

highlights

  • Almost 400 million people in 45 cities in China are in full or partial lockdown
  • The quarantines there have led, among other things, to food shortages and a lack of access to medical care
  • Incoming cargo now hangs at the marine terminals in Shanghai for an average of eight days

Nearly 400 million people in 45 cities in China are under full or partial lockdown under China’s strict zero-Covid policy. Together, they represent 40 percent, or $7.2 trillion, of the world’s second-largest economy’s annual gross domestic product, according to data from Nomura Holdings, CNN reported.

Analysts are ringing warning bells but say investors are misjudging how severe the global economic fallout from these ongoing isolation orders could be. “Global markets may still be underestimating the impact as much attention continues to focus on the Russia-Ukraine conflict and the US Federal Reserve’s rate hikes,” Lu Ting, Nomura’s chief China economist, and colleagues wrote in a note last week , reported CNN.

Most alarming is the indefinite lockdown in Shanghai, a city of 25 million and one of China’s key manufacturing and export hubs. The quarantines there have resulted in food shortages, lack of access to medical care and even reported pet killings. The port of Shanghai, which handled over 20 percent of China’s freight traffic in 2021, is practically at a standstill. Food supplies stuck in shipping containers without access to refrigeration are rotting, CNN reported.

Incoming cargo now stalls at sea terminals in Shanghai for an average of eight days before being shipped elsewhere, a 75 percent increase since the start of the most recent lockdown. Storage time for export has fallen, but that’s likely because new containers aren’t being sent from warehouses to docks, according to supply chain visibility platform Project44. Cargo airlines have canceled all flights in and out of the city, and more than 90 percent of trucks supporting import and export deliveries are currently out of service.

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