The lookdowns in China succeeded to contain the outbreak of the Corona virus, which aims to eliminate any trace of the virus in the country, despite that, it led to the deterioration of the economy as a result of inflation and an increase in food prices, which affected the spending millions of citizens and stopped production in major cities such as Shanghai.
In the following some important points about the impact of the lockdowns on critical sectors in China which is the second largest economy in the world.
1)Commodities Hit
The war between Ukraine and Russia led to a rise in prices and a slowdown in the proportion of imports of basic goods in March 2022 in China
– Natural gas purchases are the most affected, as they fell to less than 8 million tons, and that was the lowest level it had reached since October 2020. Imports of liquefied natural gas fell in the first quarter with about 14% from the same period last year
-Demand jet fuel for planes is expected to be reduced by 3.5% from a year earlier it’s about 25,000 barrels per day. According to Airportia which is a real time flight tracker the daily number of flights in china has fallen below the lowest level seen in 2020 with less than 2,700 flights.
-According to a post on WeChat by China Railway, The number of train passengers has decreased to 3,000 per day and it’s about 30% of their normal level
– Domestic metals fabricators in China are facing problems in transportation of raw materials and finished products, which have led to output cuts. Six out of twelve copper-rod plants in Shanghai’s stopped the production processes.
2) Shanghai Port Congestion
According to Bloomberg shipping data, Shanghai’s lockdown has created congestion at one of the most largest ports world wide. The number of container ships waiting off Shanghai as of April 11 was 15% higher than a month earlier.
According to ship owners and traders, the shortage of port workers in Shanghai slowed the delivery of documentation needed for ships to unload cargoes. however, vessels carrying metals like copper and iron ore are left stranded offshore as trucks are unable to send goods from the port to processing mills.
3) Automotive slowed down
Because of lockdowns some automakers are facing production obstacles. The overall passenger vehicle sales decreased by 10.9% last month, which is an impact of a pressure in the car market.
-Tesla Inc.’s Shanghai factory has been shut down since March 28 because of restrictions in the city. This plant usually produces more than 2,000 cars every day.
-Volkswagen AG was also forced to suspend production in Shanghai this month
4)Inflation Risks
The lock down have pushed up food prices and could jeopardize the country’s ability to get enough grain all year long, as restrictions complicate a key crop in the season Chinese Spring. Prices of fresh vegetables rose 17.2% year-on-year in March, compared with a 0.1% decline in February, according to National Bureau of Statistics data released . Chinese farmers in the northeastern regions, which produce more than a fifth of China’s national grain output, have faced restrictions that have kept them from plowing and sowing seeds.
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