How China’s COVID lockdowns affect the world
- China’s zero-COVID policy is creating supply-chain bottlenecks
- China controls 12% of the world’s trade
- WHO has called China’s policy ‘unsustainable’
Vietnam, the southeast Asian nation that makes a large portion of the world’s Adidas shoes, is running out of material. In Shanghai, the hub of tech production, component shortages are hurting companies. Phipps International is struggling to get its supply of faucets, and Pegatron Corp., the world’s major iPhone supplier, has had to cut its second-quarter outlook for notebook shipments. All this, because of China’s strict COVID-zero policy.
Beijing has adopted one of the most stringent measures to stomp out the novel coronavirus that originated in the country in 2019 and then spread to the world causing havoc, with millions dying and entire economies collapsing. Now, the Xi Jinping led Communist government is creating supply-chain bottlenecks that may well derail the Asian economy. China controls nearly 12% of the world’s trade, and as such, its actions have wide-ranging consequences.
The impact, currently, does not seem as severe. But that is because this is only the beginning of a burgeoning crisis. China has effectively locked up vast populations which have raised questions on Beijing’s approach to human rights. The World Health Organization (WHO), the UN-backed health agency, has called China’s approach “unsustainable” vis a vis the nature of the virus.
Meanwhile, Beijing’s policy has the capacity to cause far greater havoc. The policy has put factories out of production and slowed truck deliveries. Container logjams have intensified. “All the construction projects are backed up waiting on raw materials…The supply chain has been a mess already, and this is making it worse,” said Jake Phipps of Phipps International, the American luxury bathroom fixture company to Bloomberg.
“Once Shanghai opens up and everything is back into rotation, and you will see all the vessels heading towards the US, that can pose additional challenges and additional congestion,” according to Jonathan Gold of the US’ National Retail Federation.
One of the biggest challenges emanating from China’s zero-COVID policy is a shortage of medical supplies. Healthcare facilities are witnessing a shortage of an iodinated contrast medium called Omnipaque. Produced at a GE Healthcare factory in Shanghai, the chemical agent is widely used in X-rays, radiography and CT scans. While the factory has resumed production, the shortage may last a couple of months, according to the Greater New York Hospital Association.