Global Times investigates: China’s zero COVID policy and flexible measures ensure minimal impact on supply chains | News

BEIJING, March 20, 2022 /PRNewswire/ — Concerns in some US media over potential supply chain backlash as a series of Omicron cases hit some of the China the great manufacturing and commercial cities testify to China importance in the global supply chain, analysts and industry insiders said on Friday. While some sectors are inevitably affected during the current fight to contain the virus, the overall health of the supply chain in China remains solid, thanks to the effective dynamic zero-COVID strategy, and as cities rapidly resume production, the impact of this series of outbreaks will be very limited, they said.

While the “worst outbreaks” in two years caused by the highly contagious variant of Omicron have hit many China manufacturing centers, US media rushed to report supply chain issues and port delays, citing factory suspensions run by major companies including Toyota, Volkswagen, Tesla and Apple OEM Foxconn.

However, economists said what people are seeing this week in China is not comparable to the United States, where serious supply chain problems, from ports to warehouses, are helping to fuel record inflation.

The impact of this series of outbreak and epidemic control measures has on China The supply chain is temporary and controllable, and supply chain disruption is likely to be compensated for as companies ramp up production, analysts pointed out.

Bai Ming, deputy director of China’s Commerce Ministry’s International Markets Research Institute, told the Global Times on Friday that as Chinese localities gain more experience in fighting the virus, they tend to to achieve faster results and that the recovery is also faster.

Such a manual was not familiar to foreigners. They might be surprised by the sudden suspension of factories this week in the Yangtze Delta and the Pearl River Delta, which are at the center of the global supply chain from electronics to consumer goods, Mr. Bay.

The latest epidemic has forced Shanghai and ShenzhenChina’s No.1 and No.3 cities by GDP to introduce strict measures including remote office work and factory suspensions, while large-scale coronavirus testing was carried out.

Still, Chinese companies now have a wealth of experience coping with the impact of strict anti-epidemic measures and benefit from the country’s overall success in keeping the virus at bay, analysts said.

Companies in Shenzhen move their production equipment and materials to sites unaffected by outbreak control restrictions, operate backup facilities, and rely on closed-loop management in industrial complexes that reduce the risk of infections. The only weak link in the supply chain seems to be logistics, as the flow of freight remains hampered in the current situation. These measures mean China is not the problem of the global supply chain, but its solution.

The epidemic since the beginning of this year has affected the operation of some ports, but some ports are also seeing their throughput increase as cargoes have been redirected. According to data released by the Ministry of Transport, under the impact of disease outbreaks and logistics bottlenecks, the container throughput of the port of Shenzhen decreased by 10.9% year-on-year in January and February, while the port of Canton given the stagnation. Both ports were world-class container terminals.

However, seen from across the country, the Port of Shanghai, the world’s largest container port, actually saw its throughput increase by 9.6% to 8.16 million containers over the same period. Ningbo-Zhoushan Port recorded an increase of 1.1%.

An official from the Ningbo-Zhoushan Port Authority told the Global Times on Friday that strict anti-epidemic measures are weighing on the efficiency of port operations, but the port has also come up with targeted measures to mitigate those impacts. In Ningbo-Zhoushan, freight truckers received green passes; the port added six new shipping lines to expand its markets and introduced trains to load containers directly into the port.

“We have solved the port blocking issue, which was a headache last summer,” the official said.

Contrary to claims that ship delays can stretch up to 14 days, the ability to handle ships in some Chinese ports is improving with the necessary epidemic control measures in place.

“For 2021, the average wait time for a ship to enter port was 21.8 hours. January 1 to March 17this time has been reduced to 17.28 hours.”

One of the factors underpinning the port’s good performance, the official said, is that factories in the hinterland China have not been affected by the epidemic, thanks to the country’s effective epidemic control policies, and they have been able to send an unceasing flow of goods to the port for export to overseas markets.

In Shanghai and Shenzhenjust as many factories were ordered to halt production, many were also given the green light to resume operations within days, proving the outbreak is controllable.

five quarters of Shenzhen who have met the dynamic zero-COVID policy requirements resumed normal work and life from Friday with bus and metro services returning to normal.

An official from a global consumer electronics maker confirmed to the Global Times that the company had received notices from the local government allowing its employees to return to the office for vital errands in Nanshan district, even as the office building would be officially cleared for reopening on Sunday, showing the government’s flexible approach.

In ShanghaiTesla said its Shanghai Gigafactory, a major production base for the U.S. electric car maker, resumed operations on Friday after production was reportedly halted for two days due to coronavirus prevention requirements.

Gao Shiwang, director at China Chamber of Commerce for the Import and Export of Machinery and Electronic Products, said that based on experience, if the suspension is only for one week, any disruption in the supply chain could be offset by a faster production and delivery.

Minimum costs, maximum gain

Chinese President Xi Jinping on Thursday chaired a leaders’ meeting on the fight against COVID-19, during which he stressed precise, science-based measures and adherence to the dynamic zero COVID policy. to curb the spread of the epidemic as soon as possible.

More effective measures should be taken to achieve the maximum effect in prevention and control with minimum costs, and to reduce the impact of the epidemic on socio-economic development as much as possible, Xi said.

Economists and analysts said the dynamic zero COVID strategy is still the biggest advantage China a in his COVID-19 battle.

A National Health Commission official said on Friday that China epidemic control measures have reasonably struck a balance with socio-economic development. The official said it would be inappropriate to over-attribute economic losses to epidemic control measures due to the complicated relationship between the two.

Analysts said the pessimism created by Western media, including the rush by foreign institutions to revise down their forecasts of China economic growth, may stem from a misunderstanding of the epidemic control situation in China.

Morgan Stanley has lowered its economic growth forecast for China to zero for the current quarter compared to the last three months of 2021, while Goldman Sachs has reduced its forecast for 2022 to China economic growth from 4.8% to 4.3%.

the Australia and New Zealand Banking Group recently published a report on the economic cost of China COVID-zero approach, concluding that the policy has a limited impact on the economy because the measures are very localized and targeted, estimating that the economic impact will be only 0.6% of annual GDP.

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SOURCE World Time

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