Shanghai–the manufacturing and financial hub of China is expected to open up after tiring restrictions from the end of March.
A general view shows empty streets during the second stage of a Covid-19 lockdown in the Yangpu district in Shanghai on April 1, 2022. (Photo by AFP) / China OUT
20 May 2022 has been given as the first official deadline for Shanghai–China’s largest city, to open up.
The metropolis, home to the world’s largest container port, entered lockdown in late March for what was meant to be 10 days as part of China’s strict Zero-Covid strategy. Most of the city’s 25-million residents have been living in restriction ever since with a deleterious effect on local transport as the trucking chart below illustrates.
Closed-loop productions are unacceptable as a long-term solution for German companies to operate in China
Up until today, Shanghai authorities had been unwilling to state a firm date for when the city would reopen with persistent cases of covid flaring up across its 16 districts.
Vice mayor Wu Qing claimed at a news conference on 14 May that an orderly opening would now proceed in the middle of May, using a Chinese term that refers to the period between 11 and 20 May.
Concerning the port operations, Peter Sand, chief analyst at container platform Xeneta, told that it would take anywhere from four to eight weeks for normal operations to resume, while gateway terminals in the US and Europe have repeatedly been warned by container analysts to brace for a so-called whiplash effect from Shanghai’s reopening.
The lift on restrictions cannot happen soon enough with many international manufacturers reporting extreme distress and pessimism at how local authorities have handled the Shanghai outbreak.
A flash survey carried out from 6 to 8 May, polling 460 member firms of the German Chamber of Commerce in China, indicates that only a small number of companies have been able to operate and resume production in the country. Foreign employees are increasingly planning to leave the country because of China’s strict covid policy, the survey showed.
In areas affected by lockdowns, companies can only resume their operations under constraints. Just 19% of the surveyed German-based firmes have permits to produce under adverse conditions in such locations. Of those allowed to run operations under restrictions, many only operate at less than half of their full production capacity. Logistics problems, low availability of staff, and uncertainty caused by sudden changes in policies are the main causes for hampering the increase of production capacity, the survey revealed.
Nearly one-third (28%) of foreign employees of the surveyed firms plan to leave China due to Covid-related measures, with 10% planning to do so even before their current employment contract ends.
“It will be extremely challenging for German companies to substitute these employees with new staff from abroad, considering how the current covid outbreak in China is handled”, said Maximilian Butek, executive director of the German Chamber of Commerce in Shanghai. “The current circumstances under which German companies have to operate in China can only be short-term solutions in emergency situations. Closed-loop productions are unacceptable as a long-term solution for German companies to operate in China.”
Among other crucial findings from the survey, it turns out that 73% of the respondents’ business operations are in locations under full or partial lockdown.
At least 32 cities across China are now under full or partial restrictions, impacting up to 220 million people, according to calculations from the international news channel CNN.
China’s government has this week imposed a de facto international travel ban, forbidding people from going overseas for non-essential reasons.
In a statement on 12 May, the Chinese National Immigration Administration published it would tighten its reviewing process on issuing travel documents such as passports, and strictly limit those looking to leave.
SOURCE: SPLASH247