The world’s supply chain networks are bracing for additional shocks stemming from an omicron outbreak in China. Factories could stay open under China’s strict virus containment measures in 2020 and 2021. However, the world’s second-largest economy is likely to impose even tougher restrictions to curb the spread of the contagious Omicron strain, which is expected to disrupt ports and factories. Analysts warned that severe manufacturing or logistic shutdowns in China would have a massive impact on the global economic environment.
Clothing factories and gas deliveries are shut around Ningbo, one of the world’s busiest container ports, due to an outbreak of both the delta and omicron strains. Computer chip manufacturing sites are also closed in the locked-down city of Xi’an. Anyang in Shaanxi province initiated a city-wide lockdown on Tuesday, while Tianjin, home to the world’s ninth-largest port in terms of cargo throughput, began locking down two towns. Authorities in Shenzhen, China’s main technology hub, tightened restrictions on vehicles entering the city on Tuesday, prompting concerns about delays at nearby Yantian port.
China’s strict restrictions come as the global supply chain networks are already grappling with shortages of truckers, container boxes, and ships. Frederic Neumann, an economist at HSBC Holdings Plc, warned that if China and the rest of Asia do not succeed in containing the virus, it will trigger “the mother of all supply chain stumbles.”
