China is one of the world’s few countries that is still devoted to the Zero-COVID approach
China registered approximately 200 new coronavirus cases each day by the end of December 2021, the highest level since the country’s initial outbreak two years earlier. The majority of infections were triggered by an outbreak in the northwestern industrial and technology center of Xi'an. After detecting 127 infections, more than 13 million individuals have been placed under tight restrictions since December 23. Driving a personal car, taking a flight, and conducting any non-essential businesses were all prohibited, and each household could only go grocery shopping once every three days. Yan'an, a neighboring city to Xi’an, has also been placed under strict lockdown measures, with hundreds of thousands of residents confined to their houses. This is the most restrictive measure implemented since China sealed off the city of Wuhan, where the coronavirus was first discovered.
Yuzhou, another city, was just placed under lockdown on January 3 after only three asymptomatic COVID-19 cases were found. Over a million people have been told to stay indoors. Stores and supermarkets have also been asked to halt all activity except those required for daily life, while public transportation, public meetings, and classes have been banned.
China’s zero-tolerance approach
According to Our World in Data, China has fully inoculated approximately 84 per cent of its population, while the number of daily infections is low compared to other countries and a high transmissible of Omicron variant has yet to be found in the community, but China is still committed to maintaining its zero-tolerance approach. The country stuck to this strategy from the beginning, and it will most likely be one of the last to quit it. It has implemented serious measures to avoid significant outbreaks, including stringent regulations, mass compulsory testing, robust contact tracking systems, and quarantine requirements for travelers arriving from abroad. President Xi Jinping stated that anything that causes sickness and death would have consequences to the country's politics, society, and economy. That said, despite only one or a few infections being discovered, the authorities believe that controlling the pandemic as quickly as possible is a high-priority duty for both residents and officials. As of now, China will maintain tight controls at ports and borders ahead of the Lunar New Year and Beijing Winter Olympics, which will take place in early February this year, where tens of thousands of visitors will be allowed to enter the country. According to a Bloomberg study, Chinese vaccinations offered to the great majority of the country's population do not give effective protection against the omicron strain. As a result, it is expected to strengthen China's determination to stick to its Covid Zero program until the 20th National Party Congress is held in November.
Costs and implications
People quarantined in the Chinese city of Xi’an are bartering goods amid concerns over food shortages. Local media presented residents exchanging cigarettes and electronic devices for meals. Authorities in Xi’an have started giving out free meals to locals, but there have been several complaints on social media. Some people reported that their supplies were getting low or they have not yet received assistance. As a result, people have returned to the era of bartering – a trading system that does not rely on money or any other monetary medium.
Despite the complaints, Xi’an authorities claimed the city’s campaign against the COVID-19 a success last week. Fourteen days into lockdown, local officials stated Xi’an had achieved zero COVID on a public level, though its 13 million citizens were still unable to leave their homes. Likewise, large international corporations in the city have been impacted. Due to the restrictions, two of the world’s major memory chip manufacturers, Samsung and Micron, have noted they have had to adjust operations at their Xi’an manufacturing facilities, possibly destabilizing the already shaky global supply chain.
In addition, China’s draconian Zero-COVID policy is putting further strain on the country’s ports, further affecting global logistics. According to Nikkei Asia, China has begun requiring cargo vessel crew members to be tested for COVID-19 before arrival, and if one suspected case is detected, everyone on board must quarantine for at least two weeks. Meanwhile, following the discovery of the Omicron variant, China extended the mandated quarantine period for crews returning from duty to seven weeks from the previous six, exacerbating crew shortages and staff scheduling issues.
The schedule reliability of global liners – a measure of whether ships arrive or depart on time – was less than 34% in November. Four carriers have schedule reliability of less than 20%, with Evergreen having the lowest since October 2021 at 13.4%. Maersk was the most reliable top-14 carrier once again, with a score of 46.4%.
Shipping costs, on the other hand, have skyrocketed. The Baltic Dry Index, a common indicator of global shipping rates used by economists, has soared more than 110% from the beginning of 2020 despite having fallen during the fourth quarter of 2021.
However, the yuan recently surged to nearly a three-year high against the dollar, as the country’s solid export growth and substantial investment underpinned the currency strength. The Chinese yuan ended 2021 as the best performer among major emerging market currencies, rising roughly 3% versus the dollar while most others fell.