Global Economy Heading For "Mother Of All" Supply Chain Shocks As China Locks Down Ports

China disrupting logistics: Covid lockdowns impacting factories and port activities  Jan 14, 2022
To prevent the disease from spreading, the CCP has implemented lockdown orders in many cities throughout the country. This measure has impacted factories and ports’ operations that worsens global supply chains.

Global Economy Heading Down As Supply Chain Shocks Due to China Ports Locked Down

Bloomberg-China’s Omicron Lockdown is the Mother of All Supply Chain Market Shocks

https://www.bloomberg.com/news/videos/2022-01-11/china-blocks-some-flights-from-u-s-on-covid-precautions-video

China’s Zero Tolerance Covid Policy | Peter Zeihan on lockdowns and supply chains Dec 21, 2021

CHINA’S VACCINES DON’T WORK, OR THEY ARE TRYING TO DISRUPT THE GLOBAL ECONOMY AS PART OF A LARGER WAR STRATEGY

In this video update he discusses #china China, South East Asia and Supply Chains.

Sign up to his newsletters and video updates here…  https://zeihan.com
“As we now enter the third year of the ongoing #COVID pandemic, we have had an evolution in how countries–especially in East Asia–react to outbreaks. Gone are the days of national lockdowns, and instead provincial, city, and even facility specific lockdowns are the norm. While it might sound like an improvement for supply chain security, it’s not: instead of a wide-spread lockdown that could carve out exemptions for certain classes of workers or strategic manufacturing needs, entire facilities are shut down and no goods can get out.

But there’s a much more significant shift underway than the changing minutiae of how countries react to rising infection levels and new variants. It’s China. The Chinese Communist Party once based its legitimacy on guaranteeing full employment and economic prosperity for its people. Now, the Chinese population looks to Beijing to guarantee its health. Zero-tolerance lockdowns, like the one currently underway in Zhejiang and the globally significant port of #Ningbo reflect a Chinese strategy geared toward proving to its citizens that it takes their concerns regarding COVID seriously. Not keeping jobs at a factory or port facility filled. Not reaching artificial production quotas. Not making sure foreign supply demand is met.

After decades of orienting national policy toward making China the largest and most important part of as many global supply chains as possible, Beijing’s decision-making rationale has shifted.

Global Economy Heading For “Mother Of All” Supply Chain Shocks As China Locks Down Ports BY TYLER DURDEN

And, as we have also discussed in recent weeks, one place where this growth slowdown is emerging – besides the upcoming deterioration in US consumption where spending is now being funded to record rates by credit cards before it encounters a troubling air pocket – is China and its “covid-zero” policy in general, and its covid-locked down ports in particular.

But what until recently was a minority view confined to our modest website, has since expanded and as Bloomberg writes overnight, the effects of restrictions in China as the country maintains its Covid-zero policy “are starting to hit supply chains in the region.” As a result of the slow movement of goods through some of the country’s busiest and most important ports means shippers are now diverting to Shanghai, causing the types of knock-on delays at the world’s biggest container port that led to massive congestion bottlnecks last summer that eventually translated into a record number of container ships waiting off the coast of California, a glut that hasn’t been cleared to this day.

CONTAINER SHIPS STUCK AT PORTS

With sailing schedules already facing delays of about a week, freight forwarders warn of the impact on already back-logged gateways in Europe and the US and is also why HSBC economists are warning that the world economy could be headed for the “mother of all” supply chain shocks if the highly infectious omicron variant which is already swamping much of the global economy spreads across Asia, especially China, at which point disruption to manufacturing will be inevitable.

“Temporary, one would hope, but hugely disruptive all the same” in the next few months, they wrote in a research note this week first noted by Bloomberg.

For those who have forgotten last year’s global shockwave when China locked down its ports for several days, a quick reminder: it led to an unprecedented hiccup in global logistics and shipping which hasn’t been resolved to this day. That’s because China is the world’s biggest trading nation and its ability to keep its factories humming through the pandemic has been crucial for global supply chains.

While the outbreak of omicron in China has been small compared to other nations (if one believes China’s official data, which is a big if) authorities are taking no chances, especially with China’s continued “zero-covid” policy. In recent weeks scattered infections of both the delta and omicron variants have already triggered shutdowns to clothing factories and gas deliveries around one of China’s biggest seaports in Ningbo, disruptions at computer chip manufacturers in the locked-down city of Xi’an, and a second city-wide lockdown in Henan province Tuesday.
SEE ARTICLE FOR MORE

The ‘Mother of All’ Supply Shocks Lurks in China’s Covid Crackdowns Bloomburg January 12, 2022

The world economy could be headed for the “mother of all” supply chain stumbles.

https://www.bloomberg.com/news/newsletters/2022-01-12/supply-chain-latest-china-s-covid-fight-risks-more-supply-turmoil

That’s the warning from HSBC economists who caution that if the highly infectious omicron variant which is already swamping much of the global economy spreads across Asia, especially China, then disruption to manufacturing will be inevitable. “Temporary, one would hope, but hugely disruptive all the same” in the next few months, they wrote in a research note this week.

China is the world’s biggest trading nation and its ability to keep its factories humming through the pandemic has been crucial for global supply chains.

While the outbreak of omicron in China is small compared with its Western peers, authorities are taking no chances. In recent weeks scattered infections of both the delta and omicron variants have already triggered shutdowns to clothing factories and gas deliveries around one of China’s biggest seaports in Ningbo, disruptions at computer chip manufacturers in the locked-down city of Xi’an, and a second city-wide lockdown in Henan province Tuesday. 
(Check out Bloomberg’s full story below.)

https://www.bloomberg.com/news/videos/2022-01-11/china-blocks-some-flights-from-u-s-on-covid-precautions-video

China’s Omicron Outbreak Is Even Worse News for Global Supply Chains
China facing multiple outbreaks of delta and omicron variants
Two cities are now locked down, more are facing restrictions
https://www.bloomberg.com/news/articles/2022-01-20/china-widens-testing-blitz-as-foreign-mail-suspected-for-covid