WORLD

China’s COVID outbreak and lockdown threatens the nation’s economic growth

A medical worker in a protective suit collects a swab from a worker for nucleic acid testing at a Foxconn factory, following new cases of the coronavirus disease (COVID-19) in Wuhan, Hubei province, China August 5, 2021. Picture taken August 5, 2021. China Daily via REUTERS

China’s Shenzhen houses the headquarters of some of the biggest tech companies in the world – we’re talking Tencent, Apple, Foxconn. But with 17.5 million people in lockdown, business is not as usual. The Guangdong province makes up 11% of GDP, which is close in size to Spain and South Korea. This is while other provinces like Shanghai are battling outbreaks as well. When you have key manufacturing, tech and financial hubs all OOO and are also home to the most important ports in the country, it’s not great news for the existing global supply chain issue.

Key comments:

“Disruption of manufacturing supply chains has been minimal so far in China, but more problems look inevitable given the importance of Shanghai and Shenzhen as both ports and manufacturing hubs,” wrote economists at Gavekal Dragonomics on Monday.

“Globally, the economic impact of Covid is declining as governments ease restrictions and many move towards a ‘living with Covid’ approach. However, for China, omicron is a key risk for domestic demand, output and, possibly, supply chains,” said Louis Kuijs, Asia-Pacific chief economist at S&P Global Ratings.

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