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China's COVID-19 outbreak might bring global inflation: Expert

ANI | Updated: May 06, 2022 23:09 IST

Beijing [China], May 6 (ANI): With a tremendous rise in COVID cases caused by the Omicron variant, China is going through its worst outbreak which will impact freight costs and global inflation, said a media report.
Federico Giuliani, covering Asian events for Il Giornale - Gli Occhi della Guerra, writing in Italy-based news website Inside Over said as the cost of shipping has gone high during past years, the freight charges are expected to increase due to the delays and the waiting times at the ports. It could create economic repercussions on global trade.
It is said that 90 per cent of the world's goods are carried over sea. Maersk, the world's second largest shipping company, has suggested that lockdown will severely impact truck services and transport costs would perceive a rise at an unexpected level. Businesses may not tolerate this unfortunate development and they will divert the cost on customers, said Giuliani.
Logistics companies have advised vessel operators to offload the products at other ports due to heavy traffic restrictions at the Shanghai port. Ultimately customers have to bear the additional shipment and storage charges.
In 2021 the port handled 20 percent of China's freight traffic. If the delays continue for an unexpected period other ports may not be capable of filling the void.

Some factories have tried to maintain the production at a closed-loop system with measures like workers secluded inside but it seems difficult to keep the momentum due to the high covid curbs. As a result of the lockdown many companies were forced to shut down their factories.
"More than the pandemic it is the bad decisions of the Chinese government to be blamed. And to make matters worse, there is the risk of supply chain issues that are accelerating across the country and world. Because Shanghai is one of the main export centers in China," Giuliani said.
Shanghai, the financial capital of the country has reported over 20,000 cases per day. It is around 14 days where the city has been in complete lockdown.
Amid the surmounting restrictions and stringent lockdown measures in April, China's Zero Covid Policy, imposed upon the Chinese natives have added to the country's economic woes.
Giuliani said that the impact of Chinese government policies is much greater than the problems caused by pandemic. If the lockdown continues prominent economists have warned of bigger impacts on the global supply chain.
Government has adopted a zero tolerance policy towards the businesses, citizens. No matter whether you are contributing to the GDP or not, the arbitrary irrational decisions of authorities prevails, he added.
In context, Xinhua news agency reported that China's much-publicized "zero-covid" strategy that the government credited for bringing the country out of the pandemic till recently is falling apart as the rapidly mounting cases are again forcing mass lockdowns like those seen in 2020. (ANI)