The patchwork of lockdowns imposed on regional centers in pursuit of a “Zero COVID” policy has severely impacted the economy of China.  Plants have been shuttered and ports are non- functional as a result of “stay-at-home” directives.

It is understood that road transport during the first half of April was 27 percent less than the corresponding period in 2021.  In Shanghai this measure was down 83 percent due to the severe restrictions imposed on a metropolitan area with a population of 26 million.

Recognizing the deleterious impact of home confinement, authorities in China are allowing selected factory operations to resume subject to “closed loop” labor use.  This means that employees that are housed in dormatories on site can operate a plant subject to periodic testing.  Despite this relaxation of COVID policy workers are still precluded from returning from their homes since travel restrictions are in force.  Some critical industries including automotive parts and auto assembly, chemicals and pharmaceuticals, or installations with a high degree of mechanization are operating, but at variable levels of throughput depending on location.  Even with adequate labor, manufacturing companies are experiencing problems with supply chain disruption.  Concentration of world production in China for critical pharmaceuticals, agricultural chemicals and feedstock compounds has impacted supplies of necessary inputs and has raised prices on all continents.

As the world emerges from COVID, China is experiencing problems attributable to the conflicting demands of zero infection and a highly susceptible population.  The National Convention of the Communist Party of China, due to take place during the second half of 2022, is the underlying factor behind the attempt by the central government to suppress COVID.  The Convention is expected to authorize an unprecedented third term for President Xi Jinping who does not wish any opposition to his candidacy, criticism of his leadership or detraction from his accomplishments for China.