A ripple effect from surging Covid-19 cases in China threatens the world’s second-largest economy and poses a “risk to global” growth.
Fueled by the highly-infectious Omicron variant, Shanghai has become the latest city to suffer a phased lockdown amid President Xi Jinping’s “zero-Covid” strategy.
The financial and trading hub at the center of China’s economic success story is now the main hotspot in a nationwide outbreak that has gathered pace since the end of last month.
“We can think of no risk to the global economy, excluding nuclear warfare, that is greater than the risk of a Covid outbreak in China that shutters industrial production,” Carl B Weinberg, of research consultancy High-Frequency Economics, said.
“Uncountable manufacturing supply chains pass through China,” he pointed out as reported by the Associated Press news agency.
- China has reported more than 144,000 cases and 4,638 deaths since the virus first surfaced in Wuhan at the end of 2019.
- They are the official figures, which have been questioned by independent sources.
- Still, the rapid rise has seen major Chinese cities go into staggered lockdowns.
- They include the high-tech hub of Shenzhen, the motor city of Changchun and Hong Kong.
- Other key industrial areas hit by the Omicron wave have been Jilin, Guangdong, Jiangsu, and Shaanxi.
By the numbers: At least 3,500 cases were reported in Shanghai on Sunday or nearly 70% of the nationwide total. Twenty-four hours later, China’s National Health Commission reported more than 6,000 cases, according to media reports.
Delve deeper: Shanghai is China’s biggest city with a population hovering around 26 million. It is also the country’s main financial and business center with the busiest container port in the world.
Big picture: “If Shanghai, this city of ours, came to a complete halt, there would be many international cargo ships floating in the East China Sea,” Wu Fan, of the Shanghai pandemic task force, said.
Global fallout: “This would impact the entire national economy and the global economy,” Wu told a media briefing at the weekend.
China Factor comment: These are turbulent times for President Xi and his ruling Communist Party. At home, the economy is under pressure as the Covid-19 surge continues. Abroad, Xi and the CCP have come under fire for their “no limits” diplomatic pact with Russia as the war in Ukraine rages.