China’s coronavirus outbreak has raised concerns about trade disruption

The Covid-19 outbreak in southern China is suppressing activities in some of the country’s largest ports, raising concerns that the risk of further disruption in international trade will push up their export prices.

Since late May, Guangdong Province, one of China’s most important manufacturing centers, has reported more than 100 new cases, leading the government to take drastic measures.

Shenzhen Yantian Container Terminal suspended exports for nearly a week last month after workers tested positive, and its processing volume dropped sharply. As the authorities implemented preventive measures against the coronavirus, the number of ships berthing has dropped sharply.

The slowdown of the terminal has increased the congestion in the nearby ports of Nansha and Shekou in China, highlighting the vulnerability of global shipping in the country. Compared with other large economies in the past year, the country’s new infections are still very low. .

“This is a question of the size of the terminal,” said Lars Mikael Jensen of Maersk, an international shipping company. “This is a terminal that is active in all markets. It is one of the largest terminals in the world. It will have a kind of chain reaction.”

It also puts pressure on China’s own trade performance. Due to the growing overseas demand for goods related to the blockade, such as electronic products and household appliances, China’s own trade performance has flourished during the pandemic.The surge in Chinese exports helps support its Fast recovery It started with Covid-19’s initial blow to the economy.

Official data this week showed that China’s exports in May increased by 27.9% year-on-year, compared with a low base last year. But according to Bloomberg’s survey of economists, they did not meet the 32.1% growth expected. Analysts said that future performance may be weakened by the interruption.

“We expect trade and production data to be affected in June,” said Iris Pang, chief economist for ING Greater China. “This may push up the overall price of electronic products, and affect China’s export prices, and ultimately affect the US and European import prices.”

Global shipping has suffered a series of pressures in the past year, including Shortage of containers And the problem of the crew being unable to disembark at the port.In China, some manufacturers have Turned to rail to transport their goods to Europe On the contrary, although the quantity is still a small part of the shipping trade.

“Other ports in China may also become more cautious,” pointed out Zhang Zhiwei, chief economist at Pinpoint Asset Management. “Coupled with the pandemic in the economies of India and Southeast Asia, shortage of ships, rising commodity and transportation costs, the increase in cases of this new type of coronavirus in Guangdong may lead to increased inflationary pressures in other countries.”

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“I think this is just the beginning. We may not be as lucky as last year,” said Penny Cheng, a shipping agent in Shenzhen, who said that shipping schedules at the city’s ports have been delayed.

Local authorities are very sensitive to any increase in cases, as the central government has imposed severe sanctions on provincial officials who reappeared from Covid-19. All residents of Guangzhou are required to be tested, and cities across the province prohibit people who test negative from leaving.

Liu Qianer Shenzhen supplementary report

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