Covid outbreak in China sparks fears of trade disruption

A Covid-19 outbreak in southern China is curbing activity at some of the country’s biggest ports, stoking fears that further disruption to international trade risks pushing up the price of its exports. More than 100 new cases have been reported since late May in Guangdong province, one of China’s most important manufacturing hubs, leading to strict counter-measures from the government.

Processing at the Yantian container terminal in Shenzhen, which suspended exports for almost a week last month after workers tested positive, has plummeted. There has also been a sharp decline in the number of ships berthing as authorities enforce coronavirus prevention measures. The slowdown at the terminal, which has worsened congestion at the nearby Chinese ports of Nansha and Shekou, highlights the vulnerability of global shipping to outbreaks in the country, where new infections have remained low compared with other big economies over the past year.

It also piles pressure on China’s own trade performance, which has boomed under the pandemic amid rising overseas demand for lockdown-related goods such as electronics and household appliances. Surging China exports have helped to support its rapid recovery from Covid-19’s initial hit to the economy. Official data this week showed that Chinese exports rose 27.9 per cent year on year in May, compared with a low base last year. But they missed expectations of a 32.1 per cent increase, based on a Bloomberg survey of economists, and analysts suggested future performance could be weakened by the disruption.

Global shipping has suffered a series of strains over the past year, including shortages of containers and problems with crew members unable to disembark at ports. In China, some manufacturers have turned to rail to transport their goods to Europe instead, though volumes remain a tiny fraction of the shipping trade.

Source: Financial Times