China’s “zero-Covid policy,” a plan of attack for battling surging Covid infections that involves mass testing, travel restrictions, and indefinite lockdown is taking its toll on the population. The newest restrictions that have been put in place are metal barriers and fences around dwellings to keep people from leaving their homes. In some places, officials are also installing electronic door alarms. These latest moves are causing widespread anger and fear, with some provinces reporting clashes with police. While the barriers will keep residents compliant with current restrictions, in the event of a catastrophe, there is no escape. In places like Shanghai, with no end to the lockdown in sight, these growing concerns are compounded by fears of food scarcity as supplies dwindle.
China’s domestic economy has been hit hard with unemployment rising to the highest numbers on record, and even production plants with closed-loop systems, meaning employees live and work on-site without outside contact, are running out of raw materials and unable to produce. These plants are also citing a lack of availability of food and medicine for their workers. The movement of goods in and out of these areas is practically at a standstill.
Top executives predict this could trigger massive losses in the global economy because it’s inexorably tied to China as a production and financial hub. “If Shanghai cannot resume production by May, all of the tech and industrial players who have supply chains in the area will come to a complete halt, especially the automotive industry,” says Huawei executive Richard Yu.
Economists warn that the U.S. will likely see rises in inflation and shortages of consumer goods like electronics, appliances and perhaps even apparel. Merchandise for historically busy buying seasons like Back-to-School and holidays may not be readily available.
As cargo and passenger flights in and out of China are canceled, security and testing for dangerous goods is suspended, and import caps are implemented, the stranglehold is only tightening. However, if the harsh measures work, we could see some ease in restrictions and then temporarily more congestion as those goods are brought to market, and finally, the pendulum swinging back toward center.
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