Kinh doanh

The re-emergence of the COVID-19 epidemic in China: The risk of supply chain paralysis

The COVID-19 epidemic re-emerges in China: The risk of supply chain paralysis - Photo 1.

Yangshan deep-water port in Shanghai city, the financial and commercial center of China

A problem in China could also be a problem for the global economy.

Ms. IRIS PANG (Economist at ING Bank – The Netherlands) commented.

“If Shanghai cannot resume production in time in May, all technology and industries related to the Shanghai supply chain will cease to operate completely, especially the auto industry.

That will cause huge consequences and losses for the whole industry,” warned Yu Chengdong, chief executive officer of Huawei’s consumer business, on April 15.

Big losses for China

According to The Guardian newspaper, comments from Huawei, one of China’s “technology giants”, show that worries about the impact of the epidemic on the economy are growing higher when the billion-people nation persists in its war. “zero-Covid” strategy, blockade Shanghai city and many other places to control the epidemic.

As the blockade order continues to apply in Shanghai – the financial center and home to the world’s largest container port, economists have warned of huge losses not only to the Chinese economy but also to the whole world. with the global supply chain.

They think that even if the blockade order is only maintained in this April, Shanghai will still lose 6% of GDP and correspondingly lose 2% of the country’s GDP.

Iris Pang, an economist at ING Bank (Netherlands), said that would reduce China’s annual economic growth target by nearly 1%, to 4.6%.

Last month, Chinese Premier Li Keqiang set the country’s GDP growth target for 2022 at around 5.5%.

Meanwhile, Alicia García Herrero, chief economist for the Asia-Pacific region at investment bank Natixis (France), commented: “We anticipate a blockade order in China every month. China, the annual GDP of this country will decrease by 0.5%.

Worry of running out of stock

Mr. Stephen Carr, commercial director at Peel Ports (one of the UK’s largest port operators), said that any disruption at a major commercial hub like Shanghai would have a major impact on the supply chain. global response.

This week, Pegatron Company (Taiwan), the key iPhone maker for Apple, said it had halted production at two factories in Shanghai and the nearby city of Kunshan. More than 30 Taiwanese companies have also suspended operations until at least next week.

Reports this week said nearly 500 cargo ships had to be anchored off the coast of Shanghai because the port could not handle it. Mr. Chen Xin, owner of a family embroidery factory in Guangdong province, said that since the end of March he has been unable to deliver about 70-80% of orders because customers cannot receive them.

Disruption at ports makes many businesses face the prospect of running out of goods. “If Guangdong province – which accounts for 13% of auto production and 15% of chip production in China – is also locked down, the supply shock will be even worse,” predicted economist García Herrero.

According to Reuters news agency, last week the European Chamber of Commerce in China sent a letter to the Chinese government saying that about half of German companies in China are having difficulties with their supply chains.

Many companies are looking to bail themselves out. Container carrier Maersk (Denmark) recommends customers to divert from Shanghai port to other Chinese ports.

Meanwhile, Foxconn Interconnect Technology Company under Foxconn Group (Taiwan) maintains the operation of the factory in Kunshan city under a closed cycle and only operates at 60% capacity.

ING Bank predicts that China’s central and local governments will take measures to mitigate the impact, increase financial support and loosen monetary policy to support economic growth.

On April 15, China’s Ministry of Industry and Information Technology said it would work with 666 semiconductor, automotive and medical companies to support the resumption of production. Support teams have also been sent to Shanghai to ensure the resumption of operations at these key businesses.

45 cities locked down

On April 16, the city of Xi’an in northwestern China began imposing a 4-day partial blockade to limit the movement of 13 million people after recording dozens of community infections during the current outbreak. due to the Omicron variation. Before that, in December 2021, Xi’an had to blockade to deal with an epidemic caused by the Delta variant.

This week, Nomura Bank (Japan) estimated that 45 cities with a total of 373 million people in China are imposing full or semi-blockade orders to deal with COVID-19. These cities account for about 26% of China’s population and 40% of GDP.

You are reading the article The re-emergence of the COVID-19 epidemic in China: The risk of supply chain paralysis
at Blogtuan.info – Source: tuoitre.vn – Read the original article here

Back to top button