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China’s COVID curbs threaten global supply chain

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China is currently on a zero-tolerance approach to COVID-19 despite how low the cases are.

It’s been two years that the world has been fighting COVID-19, but it seems like China has not yet been able to fight through it. Due to the lockdown, people have been stranded on highways, and factories have closed leading to overall disruption of global supply chains for goods.

Still, some factory workers have been operating through closed-loop management, which keeps the workers isolated inside, while for some it is becoming very hard with the rapid spread of the COVID-19. This is putting restrictions on either procurement of raw materials or shipping them off.

Foxconn Interconnect Technology, a unit of Taiwan based in Foxconn, makes data transmission equipment and connectors. The company is working in a closed loop with 60% capacity. This is just one example, there are several other companies that are operating in similar ways.

Last week, more than 30 Taiwan companies involved in making electronic parts had to suspend their production.

China is currently on a zero-tolerance policy against COVID-19 despite low cases. At Least 87 of China’s 100 largest cities by GDP are facing some sort of restrictions or the other.

The main impact is being felt on the truck transport causing long queues and further delays. Even the price for hiring trucks has shot up drastically i.e, from 7,000 yuan ($1,100) to 30,000 yuan.

Almost half of the German firms in the country are experiencing supply chain problems. To cushion the impact, China has kept the ports as well as the airports up and has encouraged the principle of working in a closed-loop.

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