China Places 37 Million People on Lockdown Due to New COVID-19 Surge, Potentially Disrupting Global Supply Chains

Chinese authorities have placed more than 37 million people in lockdown as the country struggles with its worst COVID-19 surge since the early days of the coronavirus pandemic.

Officials noted that the outbreak spread much faster than previous waves reported relating to less infectious variants. Health officials reported that daily cases skyrocketed from a few dozen in February to more than 5,100 on Tuesday, which is the highest number of new infections since the early 2020 outbreak experienced in Wuhan.

China's Lockdowns

While the number of infections in China may seem low in comparison to other countries, it is alarmingly high to a nation that has been aggressive in stomping out the virus and chains of transmission with strict zero-COVID policy throughout the pandemic.

Authorities have reported cases in 21 provinces and municipalities nationwide as of Tuesday, including Beijing and other major cities, such as Shanghai and Shenzhen. While the number of infections could still be in the thousands, the number of people who have been placed in lockdowns were in the tens of millions, as per CNN.

The lockdowns have caused trucks to be delayed because drivers are getting tested while container rates are rising as ships wait for several hours at ports. Furthermore, products are piling up inside warehouses. These are only some of the effects of the lockdowns in China that continue to add chaos to global supply chains.

The Asian nation is home to roughly a third of the world's manufacturing capacity which has been severely affected by the lockdowns. The orders have disrupted the production of finished goods like Toyota and Volkswagen cars and Apple's iPhones and components such as circuit boards and computer tables.

According to the New York Times, at the start of trading on Monday, oil prices dropped by about 5% after surging last week, a result of fears of an economic slowdown in China. Beijing officials and from other cities and provinces argued that the coronavirus infection was still spreading quickly and urged the government to take stricter actions to control it.

Global Supply Chains

The lockdowns could also cause Amazon and Walmart customers to experience delays on their orders due to affecting China's major manufacturing hubs. In Shenzhen, the location of half of China's online retail exporters was recently placed under lockdown to mitigate the spread of the coronavirus infection.

In Dongguan, a center for shoe, textile, and toy manufacturing, factories that reported cases of the coronavirus were ordered to temporarily close down and suspend operations. Authorities told more than 17 million residents to telecommute while also ordering essential businesses and public transportation to shut down.

The president of the Shenzhen Cross-Border E-Commerce Association, Wang Xin, said that the region was forced to press the pause button, halting operations for nearly all sectors. The organization represents 3,000 exporters in China's tech hub.

Wang said that the moves created a "significant disruption to the production and delivery of goods sold on major online marketplaces," noting that the association was currently negotiating with the Shenzhen government to resume some parcel deliveries, PYMNTS reported.