A sharp increase in Covid cases has been lately witnessed in China paving the path to imposing lockdowns in several cities. The country follows a zero Covid policy.
Foxconn has shut its manufacturing unit in Shenzhen further disrupting the suffering supply chain of chips to Apple and other companies. Another wave of stoppages is on the card and this may result in an increase in the prices of products. A surge in demand and a fresh burden on the supply chain is said to be creating plenty of problems for the companies.
Shenzhen houses the fourth-largest port in the world and has a population of about 17.5 million. It borders Hong Kong, which simultaneously is battling against the fresh Covid wave. Lockdown in Shenzhen means a shockwave to the global supply chain. The situation is further compounded with the Russian invasion of Ukraine that has entered the second month with no sign of peace talks on the card.
A delay by one week at the port means stagnation of about half a million of containers. The alternate routes like rail and air have their own issues and particularly in the European countries due to the Russia-Ukraine war.
Exports argue the world should now avoid depending on China for manufacturing raw materials. Import destination diversification away from the country is the call of the time. In late 2019, at the beginning of the Covid-19 wave in the Chinese city of Wuhan, India and some Western countries sought to decrease dependency on China's output. Similar decoupling may take place again. The United States, France and Japan may turn to countries like Vietnam and India for sourcing and assembling products.
While China has imposed a two-stage lockdown in Shanghai, France has reported a huge surge in fresh Covid cases. The daily number increased by more than 400 in recent days. A slight increase in the death rate has been simultaneously reported.
Residents in Shanghai have been asked to remain indoors unless they are tested. It is the financial hub of the country equipped with about 26 million people.
Meanwhile, Israeli prime minister Naftali Bennet has been tested Covid positive. His office said he is feeling well and to work from home.
The new variant is named BA2. It is more infectious than Omicron and is feared to be spreading rapidly in China and some European countries. Italy, France, the United Kingdom and Germany have witnessed a surge in new cases.
BA1, BA2 and BA3 are the three sub-strains of Omicron and are slightly tough to track. BA2 is simultaneously called the stealth variant. It cannot be tracked through a PCR test.