The Covid fire in China frightens fears of trade disruption

A Covid-19 outbreak in southern China is holding back activity in some of the country’s largest ports, fueling fears that further disruption in international trade could push up the price of its exports.

More than 100 new cases have been reported since the end of May in Guangdong province, one of China’s most important manufacturing centers, leading to severe countermeasures by the government.

The move to the Yantian container terminal in Shenzhen, which suspended exports for nearly a week last month after workers tested positive, has collapsed. There has also been a sharp drop in the number of ships piling up since authorities imposed coronavirus prevention measures.

The slowdown at the terminal, which has exacerbated congestion in the nearby Chinese ports of Nansha and Shekou, highlights the vulnerability of global transport to outbreaks in the country, where new infections have remained low compared to other major economies l last year.

“It’s a question of the size of the terminal,” said Lars Mikael Jensen of Maersk, the international transport company. “This is a terminal that is active in all markets, one of the largest in the world and leads to a sort of ripple effect.”

It also puts pressure on China’s trade performance, which has developed under the pandemic amid growing overseas demand for blockchain-related goods, such as electronics and home appliances. China’s growing exports have helped sustain its fast recovery from Covid-19’s first success to the economy.

Official data for this week shows that Chinese exports increased by 27.9 percent year-on-year in May, compared to a low base last year. But they missed expectations of a 32.1 percent increase, based on a Bloomberg survey of economists, and analysts have suggested that future performance could be weakened by the disruption.

“We expect June trade and production data to be affected,” said Iris Pang, chief economist for a large China in ING. “This could push up the prices of electronic products in general and influence China’s export prices and eventually import prices into the United States and Europe.”

The global expedition has suffered a series of strains over the past year, inclusive lack of continents and problems with crew members unable to land in ports. In China, some manufacturers have he turned to the train to transport his goods to Europe instead, even if volumes remain a small fraction of the shipping business.

“Other ports in China will probably become even more prudent,” said Zhiwei Zhang, chief economist at Pinpoint Asset Management. “Combined with the pandemic in India and the Southeast Asian economies, the lack of ships, the growth of products and shipping costs, this growth of Covid homes in Guangdong may contribute to more inflationary pressure high in other countries. “

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“I think this is just the beginning. We can’t be as lucky as last year,” said Penny Cheng, a shipping agent in Shenzhen, who said the transportation schedule had been delayed at the port. city.

Local authorities are extremely sensitive to any increase in cases where the central government has heavily sanctioned provincial officials where Covid-19 has reappeared. All Guangzhou residents were required to take a test, and cities across the province have prevented people from taking part if tested negative.

More information from Qianer Liu in Shenzhen

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