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China’s Stringent Lockdown and Global Import Export

Successive waves of the COVID19 pandemic have again caused detriment to global import export trade. The industry, already struggling with the Russia Ukraine war and previous lockdowns, is now facing acute troubles. The harsh lockdowns in major Chinese trading hubs such as Shanghai and other cities are particularly concerning. Industrial production is concentrated in these areas and lockdowns are severely hurting business prospects. 

Recently released Chinese import and export data suggests sluggish export growth and stagnant imports for the past year. While economists expected worse, the stagnant imports throw light upon more pressing issues. Not only is local demand subdued, but global supply chains are also grappling with shortages. Chinese manufacturing units have been shut and have recorded their worst months since February 2020. 

World Supply Chains Under Duress

Besides lockdown, China’s domestic trade troubles also arise from the Russia-Ukraine war. Russian Exports to China have increased by over 50%, primarily due to inflation in the cost of gas, crude oil and other commodities. This is coupled with a disturbing drop in export volume to Russia. 
Similarly, trade with Hong Kong, the United Kingdom, Germany and Japan have also suffered. While Chinese exports to the United States have improved. Apparel manufacturing in the Vietnam export and import industry has also suffered immensely.

China is referred to as the manufacturing hub of the world. It is expected that disruptions caused due to stringent lockdowns will exacerbate global inflation. Central banks in Europe, Asia, the Americas and Africa are expected to or have already announced lending rate hikes. Tech giants such as Apple and Tesla are also under pressure. 

Shipping Woes in Shanghai

Shanghai is one of the busiest port cities in the world. In 2020 alone, the Shanghai International Port’s trade volume was more than $3 Billion, down from $5 Billion in 2019. Currently, economic activity has come to a near halt as Shanghai faces a stringent lockdown. Logistical delays and other operational impediments arising from Shanghai’s lockdown have strained manufacturing processes worldwide.      

China’s Shifting Demand

Importers and exporters around the world have started looking for alternatives to plug the supply chain gap. Primarily, exporters from India and South East Asia are expected to fulfil the lost volume of raw materials from China. In case of a shift in product sourcing trends, Chinese traders are worried about their business prospects.    

Stimulus Pledged and Lockdown Tightened

The Chinese Communist Party has pledged to announce an economic stimulus package that will boost local demand. This is in continuance with a strict lockdown in major cities. The Chinese government is adamant about a zero-COVID policy. This stance is causing great stress to the Chinese import-export community and the general public. Employees are afraid of losing jobs; businesspersons are afraid of losing revenue, and those on the fringes are pining for their mere survival. The global community is closely following COVID-related developments in China. Needless to say, everyone hopes that the lockdown is eased soon.  

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