Spotlight on the economic cost of China's zero-Covid policy

Beijing, March 18 When China's Shenzhen went into a six-day lockdown earlier this after a massive surge in Covid cases, it sent shockwaves through the world's businesses. The restrictions have since widened to other major cities and provinces like Shanghai, Jilin and Guangzhou, the BBC reported.

When disruptions take place in China, it is significant because about a third of the world's entire manufacturing capacity is based in the country.

The number of ships waiting at some Chinese ports has already increased, according to project44 which monitors how freight is moving across the world.

"We saw a 28.5 per cent increase in the number of vessels waiting outside of the port of Yantian which is a major export port to Europe and North America," the BBC quoted Adam Compain, senior vice president of project44, as saying.

The new measures come at a time when manufacturing output from China was just starting to recover after the Chinese Lunar New Year holidays in February.

While China's Covid measures are drastic, however, at least most lockdowns don't last too long.

"It's a double- edged sword," says Steven Lynch, managing director at British Chamber of Commerce China.

"China comes down very quickly which causes huge disruptions but then, things will go back to normal relatively quickly."

Companies also seem to be much better prepared this time.

"We've seen these lockdowns before so companies have put in a robust supply chain management," the BBC cited Lynch as further saying.

For example, e-commerce giant Amazon bought more China-based inventory to buffer any potential disruptions during earlier Omicron surges so it doesn't anticipate a significant disruption from the latest measures.

The situation has put renewed spotlight on China's zero-Covid, or virus elimination, strategy.

On Thursday, President Xi Jinping said the country would stick to its policy but in a meeting of the country's top leaders, he also emphasised that pandemic measures should not cause economic pain.

If China continues with its zero or close-to-zero Covid strategy, it may be China's economy and the global consumers it supplies, who will feel the real pain, the report said.