Retail stores in the Chinese capital of Beijing are facing shortages as panicked buyers rush to stock up on groceries and other household items, fearing that increased covid-19 infection cases could lead to a Shanghai-style lockdown.
The efficacy of China’s strict zero covid policy that kept it safe as the virus wreaked havoc across the world in the last two years, has been tested since late March. That’s when China reported a surge of virus cases and resorted to lockdowns to curb the spread.
The latest outbreak in China is driven by the highly transmissible omicron variant and a spike in asymptomatic cases.
But the tough lockdown measures put in place by authorities to slow the outbreak are creating massive supply chain disruptions that are hurting the entire world’s manufacturing capacity. These measures threaten to push up the inflation rate in China, causing unexpected economic pressure on policymakers.
In Shanghai, one of China’s largest cities and home to more than 26 million people, food shortages were reported a week after an April 5 zero-covid lockdown that left some people starving and screaming from the windows of their apartments. Riots broke out in some neighborhoods, according to a Daily Beast report.
A slow decline in infection cases is still a concern for authorities in Shanghai and other parts of the country despite the lockdown.
Listen to GHOGH with Jamarlin Martin | Episode 74: Jamarlin Martin Jamarlin returns for a new season of the GHOGH podcast to discuss Bitcoin, bubbles, and Biden. He talks about the risk factors for Bitcoin as an investment asset including origin risk, speculative market structure, regulatory, and environment. Are broader financial markets in a massive speculative bubble?
Shanghai contributed 19,455 infections to a total of 20,194 reported on April 24, down from a 27,700 peak about a week earlier, while the number of confirmed cases in Jiangxi, home to Apple’s big suppliers, and Heilongjiang provinces grew tenfold over the past week, FT reported.
The stringent lockdown in Shanghai has hurt businesses in the Yangtze River Delta region, an area of more than 160 million people that accounts for about a fifth of the national gross domestic product.
Analysts have started downgrading China’s economic growth forecasts for 2022 below the government’s 5.5 percent target as they expect the effects of the lockdowns to hurt manufacturing, a mainstay of the economy.
Already, a number of automakers and other manufacturers highlighted supply chain disruptions, according to a Bloomberg report.
Photo: Shoppers line up at a grocery store in Wuhan, China, Jan. 22, 2020. (AP Photo/Arek Rataj)