China’s lockdowns spur concern over supply chain, freight impact

Millions under lockdown amid worst COVID-19 surge in China since early days of pandemic

Several companies in China’s manufacturing centres in both the south and northeast have halted operations amid the most sweeping COVID-19 lockdowns in the country since the start of the pandemic in Wuhan.

China, on Tuesday, reported more than 5,000 COVID-19 cases, the highest since early 2020, and the country this week locked down the entire province of Jilin in the northeast – the first such lockdown of an entire province since Hubei, where Wuhan is located, was closed off from the rest of the country in 2020.

Jilin is a manufacturing hub particularly for automobile companies, and carmakers Toyota and Volkswagen said they had suspended production in the capital, Changchun.

The current surge fuelled by the Omicron variant has spread across many cities in China and 19 out of 31 provinces have reported cases. In southern Guangdong province, two cities key to the economy, tech hub Shenzhen and manufacturing centre Dongguan, have both been put under lockdown.

Apple supplier Foxconn said it had suspended operations in its Shenzhen facility. Langfang, in northern Hebei province, which houses a facility of Foxconn’s Hon Hai Precision Industry company, has also announced a lockdown. The measures mean workers will have to stay home and production will remain suspended. The Taiwanese electronics manufacturer said it was looking to divert production to other facilities on the mainland, but with the spread of the current surge, those options are likely to narrow.

China largely managed to keep supply chains functioning normally through much of 2020 – once it curbed the initial outbreak by the summer – and also throughout 2021, when a “zero COVID” strategy, that relied on international travel restrictions as well as testing and tracing to quickly quash outbreaks, helped the Chinese economy record a robust export performance while much of the world remained caught in cycles of lockdowns. China avoided a major second wave unlike much of the world.

How the current surge impacts China’s supply chains and industrial production will add to the concerns of its major trading partners, including India, which are already preparing to deal with the spillover impacts of Russia’s war in Ukraine.