What happens in China doesn’t stay in China. And for American supply chains, that is usually a good thing.
American businesses have become dependent on low-cost goods coming from Chinese suppliers. But in a post-COVID world that may be entering the second Cold War, reliance on China means that American businesses are held hostage by an autocratic regime that seems oblivious to the damage it is doing to its own economy, much less the global one.
Since the earliest days of COVID-19, China has practiced a zero-tolerance policy to prevent COVID from spreading amongst its population. After the initial onslaught of cases around Wuhan and pockets throughout China, the government declared victory and boasted about its superior method of containment compared to Western democracies.
This draconian approach had merits in the earliest days, when the risks of the virus were unknown and there was a lack of understanding of how the virus spread. Two years later and billions of doses of vaccines that have allowed Western countries to open back up, a lockdown of any sort seems impractical and an aggressive overreach.
But China has locked down two of its three largest cities: Shanghai, a global financial center and the Chinese equivalent of New York City; and Guangzhou, a massive manufacturing and distribution city. Both are home to some of the world’s largest ports – Shanghai’s port is the largest in the world and Guangzhou is the fourth largest. Combined, the two port cities handle nearly three times the amount of cargo that the entire U.S. imports each year.
Lockdowns Chinese-Style
The Chinese version of lockdowns are far more oppressive than the most extreme Western version. In China, if you are subject to a lockdown, you can be forbidden from leaving your home for anything. No groceries, no food – absolutely nothing.
Click here to read the full story from Craig Fuller, CEO of FreightWaves.com.