Covid slams Chinese economy again

Supply chain problems might return as the coronavirus flares up again in China. Factories are shutting down and truck drivers are in short supply.

Shops and factories close again

China had only just relaxed its Covid policy after fierce protests, when another wave of contamination strikes. Especially in the cities of Beijing and Shanghai, infections are flaring up at lightning speed. Once again, it is wreaking havoc on the Chinese economy, especially since this time there are no clear government guidelines (yet).

Those who are mildly ill are asked to stay home. However, this means that at a lot of workplaces, more than half the staff are absent. Many major retailers are again being forced to stay closed, Noah Fraser of the Canada-China Business Council told Nasdaq.

Threat to the West

Factories too fear having to close, not only because their own staff are down, but also because they cannot get their hands on resources. Indeed, truck drivers, port staff and other key functions in the global supply chain are also falling ill in droves. “In a few cases, companies have closed their factories completely or reduced part of production”, Jörg Wuttke, president of the European Union Chamber of Commerce in China, said.

Another uncertain factor is the end-of-year period: in January, the Chinese celebrate their New Year, a holiday for which most migrant workers return home for weeks. Either this will extinguish the Covid wave faster and they will return to the workplace cured by January, or else they will bring the virus back after the holiday period thus keeping it in circulation for longer. Chaos looms, Wuttke warns, even for the West, which depends on China for much of its production.