The rise of covid in China has raised fears of supply

There are growing fears that lockdowns in the face of a rapidly growing coronavirus case in China will disrupt shipping from one of the world’s largest ports and create a deficit through the global supply chain.

Chinese markets were shaken today as authorities imposed a week-long lockdown in Shenzhen, a city of 17.5 million people in the country’s southeast, to deal with a rising infection rate.

Shenzhen is known as China’s Silicon Valley because of its developing technology industry, the world’s fourth largest port, Yantian International Container Terminal. Yantian is believed to handle about 90 percent of China’s massive electronics exports, making it a key cog in world trade.

Although Yantian says the port is operating normally, the Shenzhen lockdown is expected to hit trade heavily from the facility. There are already signs that the lockdown has begun to disrupt the city, including Apple’s two largest suppliers.

Foxconn, a Taiwanese company, said it had suspended operations in the city, including an iPhone factory, until further notice “in cooperation with local government anti-coronavirus work”.

The company said it would redistribute work within the backup plant to reduce production disruptions. Shenzhen is not considered one of Foxconn’s major iPhone manufacturing sites.

Unimicron Tech, a printed circuit board manufacturer, added that it would “cooperate” with the local government and suspend operations in Shenzhen until further notice.

Coronavirus cases are on the rise across China, and authorities are responding to measures in line with Beijing’s strict zero-cove policy.

Investors fear that the rapid introduction of sanctions will hurt the world’s second-largest economy if its huge industrial and manufacturing sectors freeze.

In Hong Kong, the Hang Seng Index fell 5 percent today and mainland China’s Shenzhen Composite Index lost 2.6 percent. The Hang Seng China Enterprise Index of Chinese mainland companies fell 7.1 percent, the biggest one-day fall since the global financial crisis in 2008.

China’s northeastern province of Jilin has a travel ban imposed today and has a population of more than 24 million.

Toyota, a carmaker in a joint venture with China’s state-owned FAW Group, said production had stopped in the provincial capital, Changchun.

Jilin is the first entire Chinese province to be locked down since Hubei was quarantined in early 2020 at the start of the epidemic.

Schools have been closed in Shanghai’s financial center and bus and subway services have been suspended in Dongguan, a manufacturing hub nicknamed the “Factory of the World”.

Meanwhile, the region of Hong Kong – the pre-eminent Asian financial center – is battling a fifth wave of the virus that began in late December, with more than 26,900 new cases and 249 deaths in the former British colony on Monday alone.

The National Health Commission in Beijing said today that 1,337 new internally transmitted infections with confirmed symptoms were reported in mainland China yesterday.

“The announced lockdown in Shenzhen will send shockwaves through the global supply chain,” said Simon Gill, executive vice president of Proxima, Procurement Consultancy. He estimated that a one-week delay in shipping would mean “about half a million containers are not starting their journey”.


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