By Tomoyuki Tachikawa,
A prolonged lockdown in China's commercial and trade hub of Shanghai may disrupt the global supply chain, dealing a crushing blow to the world's economy that has already lost its recovery momentum following Russia's war on Ukraine.
The Communist-led government's radical "zero-COVID" restrictions are also likely to impair domestic logistics networks centered on Shanghai, China's biggest port, and to further drag down the broader economy of the country, dubbed the "world's factory."
The ruling Communist Party is expected to continue taking drastic steps to stem the novel coronavirus pandemic until the end of its twice-a-decade congress in the fall, at which President Xi Jinping is set to secure a controversial third term as leader.
As business activities have been almost suspended in Shanghai, "we might encounter a double whammy of the disturbance of the supply chain and China's economic downturn," said Kazuya Sekiguchi, a 43-year-old marketer for a Japanese electronics maker in Beijing.
In late March, China decided to lock down Shanghai, with a population of more than 24.9 million, after sealing the southern technology hub of Shenzhen with 17 million citizens and Changchun in the northeast with 9 million.
In the areas under lockdowns in Shanghai, residents have seen their movements restricted, with public transportation halted. Tough quarantine regulations have also prevented drivers from delivering imports they loaded at the port to outside the city.
Unless Xi's leadership eases its zero-COVID policy, "China would become an inaccessible land and we cannot procure what we need for production," Sekiguchi said, adding a stagnation of the world's second-largest economy is certain to "weigh on global commerce."
Even after the end of the Beijing Winter Olympics and Paralympics earlier this year, China has still pledged to implement its anti-epidemic measures such as imposing lockdowns on cities when outbreaks occur and quarantines on travelers from abroad.
"China stands as one of the countries with the lowest infection rate and mortality rate," Foreign Ministry spokesman Zhao Lijian told reporters on April 11. "Even amid the pandemic, China's economy and society can maintain sound operation."
After the increase in coronavirus infections peaked in late February 2020, China showed signs of a V-shaped economic recovery, becoming the only major nation to achieve growth in 2020. The economy also expanded 8.1 percent from a year earlier in 2021.
In the October-December period in 2021, however, China's economy grew a tepid 4.0 percent on year. With fears mounting about another wave of infections, it edged up only 4.8 percent during the January-March quarter in 2022, official data showed Monday.
The latest data underscored that the outlook for China's economy has become gloomier in the aftermath of lockdowns in big cities.
As shipments of components for car production were stuck, auto sales in China plunged 11.7 percent from the previous year in March after rising 18.7 percent in February, while retail sales of consumer goods fell 3.5 percent last month.
In Shanghai, the total number of infection cases expanded to more than 300,000, including asymptomatic ones, from about 4,500 in a period of around 20 days from March 28 when the lockdown started.
On Monday, Chinese health authorities said three elderly COVID-19 patients died in the city on Sunday.
At an initial stage of the resurgence of infections, a local official had warned against a lockdown of Shanghai, saying it was an important player in both the Chinese and world economies. In the city, the number of new infections was low in early March.
Naoto Saito, chief researcher at the Daiwa Institute of Research in Tokyo, said, "Shanghai had been seeking to balance the zero-COVID policy with economic and social activities, but this effort has ended in failure."
"It may take at least a few weeks until economic and social activities get back to normal in Shanghai. In April, Shanghai would experience an unprecedented recession," said Saito, an expert in the Chinese economy.
In 2021, Shanghai's foreign trade hit a record high of 4.06 trillion yuan ($638 billion), accounting for over 10 percent of China's total, while the city became the world's largest container port for the 12th straight year, according to state-run media.
"A lockdown in Shanghai has significantly affected the supply chain" across the globe through logistics, said Daisuke Takahashi, a researcher at the Shanghai office of the Japan External Trade Organization.
"If the lockdown period is extended, the impact will be greater," Takahashi said, adding that confusion in Shanghai would disrupt the supply chain and take a heavy toll not only on the Chinese economy but on the world economy.
Weeks after the virus sharply spread in Wuhan, where it was first detected in late 2019, China locked down the central city for 76 days through April 8, 2020.
The economy of China's Hubei Province, home to Wuhan, plummeted about 40 percent on year in the first three months of 2020. China's overall economy marked its first quarterly decline on record during the same period.
In 2021, Shanghai's gross domestic product expanded 8.1 percent from a year earlier to 4.32 trillion yuan, as China's total GDP reached 114.37 trillion yuan.
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