The outbreak of the Covid virus in China has raised fears of disruption to trade

The outbreak of the Covid-19 virus in southern China has curbed activity at some of the country’s largest ports, raising fears that further disruption to international trade could drive up prices for its exports.

More than 100 new cases have been reported since late May in Guangdong Province, one of China’s most important manufacturing hubs, which has led to strict control measures by the government.

Processing slumped at Shenzhen’s Yantian Container Terminal, which halted exports for about a week last month after workers tested positive. There has also been a sharp drop in the number of ships docked as the authorities impose coronavirus prevention measures.

The slowdown at the terminal, which has exacerbated congestion at the nearby Chinese ports of Nansha and Shekou, highlights the vulnerability of global shipping to the country’s outbreak, with new infections remaining low compared to other large economies over the past year.

“It’s a question of terminal size,” said Lars Michael Jensen of international shipping company Maersk. “This is an active terminal in all markets, it is one of the largest in the world and it is having some kind of multiplier effect.”

It also increases pressure on China’s trade performance, which has rebounded under the pandemic amid increased external demand for goods linked to the lockdown such as electronics and home appliances. Increased Chinese exports helped support it quick recovery From the initial Covid-19 blow to the economy.

Official data this week showed that Chinese exports rose 27.9 percent year on year in May, compared to a low base last year. But they did not expect a 32.1 percent increase, based on a Bloomberg survey of economists, and analysts suggested future performance could be weakened by the turmoil.

“We expect trade and production data for June to be affected,” said Iris Pang, chief China economist at ING. “This could drive up prices for electronic goods in general and affect Chinese export prices and eventually import prices in the United States and Europe.”

Global shipping has suffered a series of pressures over the past year, including Container shortage and problems with crew members unable to disembark at ports. In China, some manufacturers have They turned to the railways to transport their goods to Europe Instead, although volumes remain a small part of the freight business.

“Other ports in China are likely to become more cautious as well,” said Zhiwei Zhang, chief economist at Pinpoint Asset Management. “In addition to the epidemic in India and Southeast Asian economies, the shortage of ships, and the rising costs of goods and freight, the rise in COVID cases in Guangdong may contribute to increased inflationary pressure in other countries.”

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“I think this is just the beginning. We may not be as lucky as last year,” said Benny Cheng, a freight forwarder in Shenzhen, who said the shipping schedule was delayed at the city’s port.

Local authorities are very sensitive about any spike in cases as the central government has imposed heavy penalties on regional officials as Covid-19 resurfaces. All Guangzhou residents have been asked to get tested, and cities across the province have banned people from leaving if they test negative.

Additional reporting by Qianer Liu in Shenzhen

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