China entered a difficult phase of its fight against Covid-19 when it introduced a lockdown in Shanghai and other big cities three weeks ago. Although current quarantine restrictions have been harmful to the Chinese economy and citizens, local authorities continue pursuing a strict Covid-19 policy that proved to be effective when the pandemic started.
New strains as well as Omicron and its BA.2 subvariant are now tightening their grip on the country. According to official data, China is now facing a record surge in new cases, unseen in 2 years. With the healthcare system being under enormous pressure, Beijing keeps following its zero-Covid strategy. The introduction of a full lockdown has knocked the economy off its feet, with producer and consumer prices remaining at a high level longer than anticipated. Soaring prices affected both Chinese and foreign producers. Among AmCham Shanghai manufacturers, some 82% reported slowed or reduced production due to the lockdown.
However, the fact that the outbreak is taking place at a time when global demand for manufactured goods is averaging after a spike during the pandemic is actually good news. This means that global supply chain pressure might be not as strong this time as it was a year ago.
