China: Supply Chain Problems Reloaded?

by | 2. Jan 2023 - 11:41 | Economy

Sharp rise in Corona cases could bring production and transport to a standstill.

The problems in global supply chains are not yet over, and new disruptions are already on the horizon. In an interview with Handelsblatt, economist Ulrike Malmendier speaks of a collapse in supply chains if China’s U-turn in dealing with the Corona virus causes case numbers in the country to “explode.” The strict “zero-covid” policy, was relaxed after massive protests, and since then the number of Corona cases has been rising rapidly. Should ports or factories be closed, this would have “dramatic economic consequences,” Malemendier added. Prices for raw materials and intermediate products are then likely to rise significantly again.

Hong Kong’s leading medium, the South China Morning Post, now sees the People’s Republic under pressure to defend its position as the world’s most important supplier of goods. The newspaper refers to numerous foreign investors who have begun to examine options in other Asian countries. Germany, too, must act now, says Ulrike Malmendier, but fantasies of decoupling are not helpful.

Photo: iStock/tcly

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