As China’s massive wave of COVID-19 infections begins its march across a country roughly the size of Europe, the ripple effect on business is accelerating. | Reuters
With mass testing halted after China abruptly dropped its zero-COVID policy this month, official data no longer reliably captures new case numbers. As of Wednesday, the country has reported only 5,241 COVID-19 fatalities since the pandemic began.
Even before COVID-19 infections began hampering companies in China, the world’s second-largest economy was already depressed by its efforts to stamp out infections, as tight movement controls and repeated lockdowns hampered consumption and production. China’s “closed loop” system, where employees are isolated from the wider world, and which had been relied on by many factories in China throughout the zero-COVID era, was beginning to fall apart as infections creep into workforces, Wuttke added.
“If the truck drivers have problems, then goods cannot be delivered to factories, the factories cannot move cars to the shops, and the whole industry chain is affected,” he said. China’s position as a key cog in the global supply chain, as well as a major driver of sales for many global consumer goods companies, means further hits to production output and consumer demand will be felt far beyond its borders.
“Reduced demand in the U.S. and Europe for consumer goods probably hides some of the impact,” said Jonathan Chitayat, the Asia boss of Shanghai-based Genimex Group, a contract manufacturer for a range of consumer products.
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