Rising COVID-19 case numbers in China have led to its government imposing more restrictions under its “zero-COVID” policy, but the results are affecting the economy with serious effects on manufacturing and the supply chain.
The U.S. State Department issued a travel advisory for the whole country in part because of COVID, according to an April 25 travel note.
“We are negative again for 40+ consecutive negative tests during this lockdown where we are trapped in our homes, not allowed to leave…,” Jared Nelson, CEO of Peak Compliance, posted on his Twitter page May 6.
The State Department issued a level 3 travel advisory for all of China, which means reconsidering travel is recommended but travel is not prohibited, according to the note. This was based on arbitrary enforcement of local laws and COVID-19-related restrictions. Shanghai was singled out as an area of concern.
China's two largest cities increased their COVID-19 restrictions May 9, dashing any hope tthe measures would ease as the month of May wears on, Reuters reported. Shanghai residents found the already stringent restrictions extended, and some areas of Beijing were instructed to do nothing outside of activities meant to prevent the spread of the virus.
“It was like a prison," Coco Wang, a Shanghai resident living under the new restrictions, said in the Reuters article. “We are not afraid of the virus. We are afraid of this policy.”
People are not the only concerns over China's lockdown policy. China's export growth has slowed to the weakest it has been in the last two years, driving down the Chinese yuan relative to the dollar, Reuters reported. Shut factories and quarantined people have crippled manufacturing supply and demand, resulting in decreased growth forecasts in the near future.
Supply chain concerns have been fueled by Chinese restrictions, the Globe-Banner reported.
“Many enterprises reported increasing difficulties in logistics and transportation, as well as difficulties in the supply of major raw materials, poor sales of finished products, overstocking and so on,” Zhao Qinghe, a senior official at China's National Bureau of Statistics said, according to the Globe-Banner.
As a result, the production and operation of businesses throughout the supply chain were greatly affected, he said, the Globe-Banner reported.
