Shanghai lockdowns will further shock American supply chains — but China is the biggest loser

| Posted by unionwear

    According to Freightwaves, Chinese lockdowns will create shocks to American supply chains.

    Since the earliest days of COVID, China has practiced a zero-tolerance policy to prevent COVID from spreading.

    After the initial onslaught of cases around Wuhan and pockets throughout China, the government declared victory and boasted about its superior method of containment compared to Western democracies.

    This approach made sense in the earliest days, when we didn’t understand the risks of the virus and there was a general lack of understanding of how it virus spread.

    Now, two years later and billions of doses of vaccines in arms have allowed Western countries to open back up. Indeed, additional draconian lockdowns seem impractical and an overreach.

    China still hasn’t changed its approach, however. They recently locked down two of its three largest cities: Shanghai, a global financial center, and Guangzhou, a massive manufacturing and distribution city. Shanghai’s port is the largest in the world, and Guangzhou is the fourth-largest. Combined, the two cities alone handle nearly three times the amount of cargo that the entire U.S. imports each year.

    Chinese lockdowns, furthermore, are not like Western lockdowns. Not leaving the house means not leaving the house. There are reports that if you become sick, you suffer without medical care, no matter how dire your condition is.

    Basically, Chinese people are held prisoners in their own homes. If you leave, you are subject to arrest and egregious penalties.

    Shanghai’s lockdowns began on April 2, and Guangzhou’s began on April 11. According to a report in Reuters, at least 373 million people – who contribute 40% of China’s GDP – have been affected.

    This has obviously crippled China’s supply chain, not to mention the rest of the world. Container volumes out of Chinese ports began to drop on April 6th and as of April 15th, have declined by more than 31%. This will have a ripple effect which will impact not just China, but also the rest of the world, possibly forever.

    Read more here.