Due to the extensive lockdown of major cities, which would have been unthinkable before the pandemic, China’s zero-COVID-19 policy has had a significant impact on global supply chains. Restrictions associated to COVID-19 have significantly reduced China’s capacity for production, logistics, and people mobility as well as its corporate and consumer trust.
China is a significant supplier of several commodities, manufacturing inputs, and consumer goods. A persistent supply shortage in interconnected global markets has been exacerbated by the loss of its industrial and logistics capability, driving up global inflation.
People frequently predict that China will suffer in a new era of retreating globalization and supply-chain reshoring, yet the most recent official figures indicate that China’s position as a trading giant is unaffected.
China’s exports in June increased at the quickest rate since January, pushing the country’s trade imbalance to a record high of $98 billion. After Shanghai started to return from a lockdown that had shuttered the city and partially closed the world’s largest port in April and May, the second-highest monthly export haul in at least three decades occurred.
According to a report released by Oxford Economics on Tuesday, the US supply strain index decreased for a third consecutive month. The report also noted that China’s stringent Covid policy and the slowing US domestic goods expenditure are both helping to reduce tension.
On a more hopeful note, there is hope due to nations’ ongoing efforts to engage in multilateral cooperation through the World Trade Organization and regional programs like the Regional Comprehensive Economic Partnership. States will be able to take the collective action required to combat the obstacles to global commerce and maintain the supply chain’s resilience thanks to this cooperation.
