Why does the lockdown in China threaten to destabilize the global economy?

It seems that COVID-19 in China and Russia’s invasion of Ukraine are the main enemies of the global economy these days. Despite the fact that it was a generally positive week for the stock markets in the world, Europe continues to have numbers in the red, waiting for what might happen.

At the moment, the results are erratic. On the other hand, major European stock markets closed higher on Friday, He is recovering after a difficult week marked by the sternness shown by central banks in its monetary policy. France won 1.34%, Frankfurt 1.46%, London 1.56%, Madrid 1.64% and Milan 2.13%.

On the contrary, the uncertainty continues in the US due to the recent Federal Reserve announcements and the cost of living continues to rise. In early trading on Friday, the New York Stock Exchange was back in the red at its open after a modest rally on Thursday. If the trend continues, indicators will close the week lower.

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

To deal with the worst wave of the novel coronavirus that China has faced since the beginning of the epidemic, the country’s economic capital – whose GDP is equal to that of Poland – has been fully or partially under siege for two weeks.

Although there have been no deaths in Shanghai and the vast majority of cases are asymptomatic infections, The authorities decided to imprison nearly 25 million people, Despite the high cost involved in 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 the authorities assert that at the moment there are fewer than ten boats waiting to dock.

“But the problem is that because of the restrictions imposed on truck drivers, the port is not really operational,” Bettina Sean Behanzen, vice president of the European Union Chamber of Commerce in Shanghai, told AFP.

The commercial representative indicated that she heard it Volumes reduced by 40% in one week at the port. “This is a huge thing,” he said.

No workers, no raw materials

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

But this effect can be felt internationally. 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 at homesaid Jason Lee, founder of a wheelchair company called Megalicht Tech, which has closed its Shanghai factory.

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.

adapting to survive

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

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Others managed to switch providers. “It’s a bit more expensive and less effective,” said Shen Shengyuan, vice president of New Yifa Group, a diaper manufacturer.

Eric Zing, President of the American Chamber of Commerce In Shanghai he wonders whether the zero-Covid strategy still works in the current context.

“That’s the big question, especially when you put it in the balance with the economic cost that it entails,” he said.

With information from Agence France-Presse.

Aileen Morales

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

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