Plants at Volkswagen, Audi, BMW and Tesla in China are at a standstill. Tens of millions of people are not allowed to leave their homes. The corona lockdown in Shanghai is slowing down handling in the world’s largest port. Even the trucks are missing. Freight traffic in the world’s largest manufacturing country is declining noticeably. “If China gets a hiccup, we’ll all have a bad cold elsewhere in the supply chain world,” warns Jorg Wuttke, Chair of the European Chamber of Commerce in China.
China contributes to a quarter of global growth. Every product has “something from China” in it. “If China’s supply chains take a hit, it will certainly affect availability, prices, choice and so on,” says Wuttke. “China is important.” He fears the second-largest economy is now falling behind with its worst corona wave since the pandemic began two years ago, while the rest of the world returns to normal.
Since the traumatic outbreak in Wuhan in central China, where the first infections were discovered at the end of 2019, China has been pursuing a strict zero-Covid strategy quite successfully. With curfews, mass tests, contact tracing and forced quarantine, the virus was caught so that everyday life and the economy ran normally. But with the arrival of Omicron and the rapidly spreading BA.2 variant, “zero tolerance” will be put to the test.
“Shanghai is fighting a new Covid enemy with old weapons,” headlines the renowned Chinese business magazine “Caixin”. The measures would have lost their effectiveness. Day after day, higher numbers of new infections are reported – most of them asymptomatic. Everyone infected has to be quarantined in China. Tens of thousands of camp beds are set up in exhibition halls that can’t be big enough. Week-long curfews in Shanghai or in the north-east in Shenyang or Jilin province have been extended indefinitely with no drop in cases in the country so far.
Shanghai, the economic and financial center of China with a population of 26 million, resembles a “ghost town”. Although it is claimed that port operations are “normal”, companies estimate the drop in throughput at 40 percent. Even if the neighboring port in Ningbo absorbs part of it, it should still be minus 15 to 20 percent. The bottleneck is mainly on land: truck drivers don’t want to drive to Shanghai. They need permits, have to take corona tests and fear quarantine on their return.
There are transport problems across the country. “Supply across provincial borders is very difficult,” reports Christoph Schrempp from the EU chamber representation in Tianjin. “Trucks will not be allowed in, or drivers will have to be changed.” Daily company operations become “essentially unplannable and unpredictable”. 40 percent of German companies in China report that their supply chains are interrupted or severely disrupted. The export route to Europe is severely affected or completely demolished for a third. 86 percent of American manufacturers in China also report disruptions in their supply chains.
Because of the lockdown, there is also a lack of ground staff at Shanghai’s Pudong and Hongqiao airports, which only handle limited cargo. In any case, there are fewer and fewer international flights. China has sealed itself off from foreign countries for two years. Anyone who still makes it into the country must be in quarantine for three weeks. Conversely, an exodus has set in: According to rough estimates, the number of foreign managers and experts had already halved by last summer – and is likely to halve again by this summer.
The zero-Covid policy “has kept us safe in the past,” admits Klaus Zenkel, the EU business representative responsible for southern China. “The same policy is now choking us.” But a change of strategy is not in sight. The costs would also be high: if China suddenly wanted to “live with the virus” like other countries, the underdeveloped health system would collapse. Tens of thousands or hundreds of thousands of deaths would have to be expected, depending on the estimate. Chinese experts warn of a “catastrophe” and a “diabolical situation”.
China is in a dilemma: the billions of people lack natural immunity because there have been hardly any diseases so far. The Chinese vaccines are not considered to be as effective as the western vaccines, which are still not approved in China. Although the vaccination rate is high in international comparison, tens of millions of elderly Chinese are not vaccinated or are insufficiently vaccinated.
“China’s adherence to its previous Covid strategy also has to do with the Chinese leadership’s political narrative of mastering the pandemic better than other countries,” says Max Zenglein from the China Institute Merics in Berlin. That’s why observers aren’t expecting a turnaround any time soon. Especially not before the party conference in the fall, at which state and party leader Xi Jinping wants to be confirmed for a third term or longer.
When it comes to the question of “coexistence with the virus” and China’s path of “dynamic cleansing”, the party is also concerned with much more: “On the surface, the election is a competition of ideas, strategies and methods in the fight against the pandemic”, writes the party newspaper “Shenzhen Tequbao”. “But in reality it is a battle between systems, national strength, governance and even between civilizations.” (dpa)