China Expected to Double Down on Pandemic Control Strategies
The new Omicron variant could be another resilience test for trade flows and already stretched global supply chains. The Chinese government has already enforced a zero-Covid policy, involving strict monitoring of cargo and commercial ships, enforced quarantines, and mass lockdowns. According to experts, the government may double down on this strict policy. If the new variant turns out to be a major threat, this can cause reopening delays in Taiwan and Hong Kong as well.
The Reasoning behind China’s Strict Covid-19 Policy
According to a study conducted at the Pekin University, dropping China’s zero-Covid policy could result in over 630,000 new infections a day. Using data from countries such as Israel, France, Spain, Great Britain, and the U.S., the researchers came up with figures and potential results if China was to implement identical policies to those in other countries. If the Chinese authorities implemented the U.S. pandemic control strategies, cases could soar to over 637,000 a day. Cases would hit over 275,700 if China adopted Britain’s policy and over 345,000 if it took the same approach as the French government. According to the researchers, a massive outbreak would place a huge burden on the country’s healthcare system.
A study by the Chinese Centre for Disease Control and Prevention published in Chinese CDC Weekly highlights the importance of strict control tactics unless specific treatments and more efficient vaccinations are available. Based on the findings, the researchers conclude that at present, the country is not ready to adopt open-up strategies solely relying on vaccination-induced herd immunity. The Chinese government also said that the benefits of maintaining a zero-Covid policy outweigh the disruptions resulting from lockdowns and extended quarantines. On December 12, China reported 61 new Covid-19 cases, down from 149 two days earlier.
Recently, the World Health Organization designated the new Omicron variant as being “of concern”, with countries in Europe and elsewhere imposing travel restrictions and curbs. Among the countries barring entry are the U.S., Israel, the UK, and the Netherlands.
Implications for Global Supply Chains
Data from the World Shipping Council shows that 7 of the 10 world’s biggest and busiest ports are found in China, including Shenzhen, Ningbo-Zhoushan, and Shanghai. Hong Kong ranked the 8th busiest port in 2020. Lockdowns in China can have a significant negative effect on maritime shipping, with backlogs for consumer, automotive, and electronic products and shortages of manufacturing materials.
China’s zero-Covid policy involves closed or heavily controlled border crossings mandatory quarantines, contact tracing and testing, and mass lockdowns. Lockdowns have been imposed even when one or a handful of workers were found to be infected. With the new variant spreading around the globe, doubling down could be expected, further hitting the capacity of international freight forwarders. Shutdowns and strict control on shipping and air crews would make it increasingly difficult for exporters to meet orders in a timely manner.