Very tough lockdowns, extremely rigid containment measures, digital and capillary controlled movements. China believes its zerotolerance approach is the cheapest and most effective prevention strategy against Covid19. The enforcement of the recent lockdown in Shanghai was carried out to curb the spread of the virus, protect people’s health and achieve the dynamic zeroCovid target as soon as possible, the city’s Prevention and Control Bureau said. Xi Jinping’s attempt to seize total control of China through this strategy could jeopardize his chances of having his power confirmed, financier George Soros recently pointed out, as it is unlikely to work against a contagious variant like Omicron. Soros argues that the Chinese population is not sufficiently vaccinated against Omicron, only against the original variant.
At the same time, according to project44, the number of ships near the port of Shanghai appears to be declining from March 27, encircling international value chains. From an average of 31 ships docking per month, the number dropped to 25 the day before the lockdown. The number of ships docking remained above average at 6 ships.
The number of ships arriving in the port of Shanghai
The first impact of the lockdown originated in oil prices, which tumbled about $4 on Monday as concerns about slowing fuel demand in China began to mount. Among the big companies that closed the Disneyland amusement park in Shanghai at the beginning of last week. The Tesla car company has also stopped production at the Stadtwerk since March 28th. With the approval of local authorities, some large companies have continued to operate, confining their employees to factory premises and adhering to Covid safety protocols.
However, disruptions in logistics and supply chain will have some impact on production capacity. At the same time, the dwell time of import containers in the port increased from an average of 3.4 days in March to 4 days on March 27th. The residence time of exports, on the other hand, remained within the usual range at an average of 2.7 days.