The Shanghai shutdown threatens to disrupt the global economy

Shanghai, the world’s main container port, is under lockdown due to COVID-19, a measure that is disrupting the Chinese economy and threatening supply chains around the world.

On April 10, China described the “baseless accusations” of criticism of the United States against its policy against COVID-19, after the confinement imposed in Shanghai, Washington decided to allow part of its personnel assigned to this huge city to leave.

The “zero Covid” policy that Beijing has championed is being tested by the outbreak of the coronavirus in Shanghai that has left nearly 100,000 cases and prompted authorities to lock down its 25 million residents, who complain of food shortages.

The US Embassy in China said it will allow non-essential employees to leave its consulate in Shanghai “due to the outbreak of COVID-19 cases and the impact of restrictions” and criticized the virus containment measures as “arbitrary”.

In response, Beijing “expressed its displeasure and resolute opposition to the baseless accusations made by the United States on China’s epidemic control policy,” according to a statement issued by the Foreign Ministry on Saturday.

“It should be noted that China’s anti-epidemic policy is scientific and effective,” said ministry spokesman Zhao Lijian.

A new and worse wave

To deal with the worst wave of COVID-19 that China has faced since the start of the epidemic, Shanghai – touted as the country’s economic capital, with a GDP equal to that of Poland – has been in full or partial confinement for two weeks.

Although there have been no deaths in Shanghai and the vast majority of cases are asymptomatic infections, the authorities have decided to confine nearly 25 million people, despite the high cost this implies to the economy.

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Thousands of trucks are stranded as drivers entering the city have to quarantine for two weeks to leave.

The shortage of truck drivers is affecting port activity, although authorities assert that there are currently less than a dozen ships per day waiting to dock.

“But the problem is that because of the restrictions on truck drivers, the port is not really working,” explained Bettina Sean Behanzen, Vice President of the European Union Chamber of Commerce in Shanghai.

The trade representative said she had learned that volumes had fallen by 40% in a week at the port. “This is a huge thing,” he said.

No workers, no raw materials

The effect is starting across China, where delivery delays are multiplied on online trading platforms, especially for imported goods. Some industries are forced to find new suppliers.

But this effect can also be felt internationally because Shanghai port accounts for 17% of China’s sea tonnage. Any disruption will slow trade in the world’s largest exporter of goods.

Entrepreneurs assert that restrictions that occur from one place to another in the country seriously affect their activities.

“Not all professions can work from home,” said Jason Lee, founder of a wheelchair company called Megalicht Tech, whose factory in Shanghai has closed.

The epidemic may affect the growth goals of the Chinese government, which has forecast an expansion of 5.5% this year, the lowest number in 30 years.


Entrepreneurs are trying to adapt to survive. Gao Yongkang, director of Qifeng Technology Company in Quanzhou, in the east of the country, could no longer deliver orders to his regular customers, so he switched to selling protective suits.

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Others are able to switch providers.

“It’s a little more expensive and less effective,” said Shen Shengyuan, vice president of New Yifa Group, a diaper manufacturer.

Eric Zheng, president of the American Chamber of Commerce in Shanghai, wonders if the strategy Zero COVID-19 It still works in the current context.

“That’s the big question, especially when you weigh it against the economic cost involved,” Cheng said.

Aileen Morales

"Beer nerd. Food fanatic. Alcohol scholar. Tv practitioner. Writer. Troublemaker. Falls down a lot."

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