How China’s Covid insurance policies are inflicting disrupted provide chains and better inflation

At the start of the Covid-19 pandemic, China’s strict “zero Covid” policy managed to keep Covid-19 in check. More than two years later, the country’s ongoing controls are still weighing on its economy and bringing global supply chains to a halt.

“Zero-Covid has become one of the chosen drivers of the global recession,” Steve Morrison, senior vice president at the Center for Strategic and International Studies, said in an interview with CNBC.

Major trade hubs like Shanghai and Beijing are requiring workers to test negative for Covid to enter public spaces after responding to waves of omicron-related infections. The demanding quarantine and testing rules have also thwarted truckers on the roads, increasing the time it takes for goods to reach Chinese export ports.

When it comes to manufacturing, China has forced some companies to operate in a closed-loop system – similar to the “bubble” strategy – where factory workers live on-site. Companies like Tesla and iPhone maker Foxconn have had to implement closed-loop systems.

Not to mention inclement weather, labor issues, and abnormal demand patterns that have also contributed to supply chain disruptions.

“Supply chains thrive on predictability,” said Simon Geale, executive vice president of Proxima, in an interview with CNBC. “And the only thing we can say about China right now is that many companies see China as predictably unpredictable.”

Watch the video above to find out how China’s evolving zero-Covid strategies are slowing global supply chains and if relief is on the horizon.