Shanghai – How One City’s Lockdown is Impacting The Global Supply Chain
After two months of full lockdown, Shanghai has finally announced they will be lifting some restrictions come Wednesday.
This light at the end of a dark and lonely tunnel for residents of Shanghai is dimmed by the economic challenges the city, and much of China, now face due to the prolonged lockdown.
As a manufacturing and exportation hub of most goods used worldwide across all industries, Shanghai had an economic valuation of over $600B pre lockdown.
But the past two months, which saw factories, businesses, and offices shutter their doors, have vastly diminished this valuation.
The global supply chain has been rocked by this situation, with repercussions being felt around the world.
To gain a better understanding of how the lockdown of a city on the opposite side of the world can impact your day-to-day life, let’s take a look at the top ten exports that come from China, and subsequently, Shanghai via its port:
China’s Top 10 Exports
The following export product groups categorize the highest dollar value in Chinese global shipments during 2021. Also shown is the percentage share each export category represents in terms of overall exports from China.
- Electrical machinery, equipment: US$804.5 billion (26.6% of total exports)
- Machinery including computers: $492.3 billion (16.3%)
- Furniture, bedding, lighting, signs, prefabricated buildings: $126.3 billion (4.2%)
- Plastics, plastic articles: $118.1 billion (3.9%)
- Vehicles: $108.9 billion (3.6%)
- Toys, games: $94 billion (3.1%)
- Optical, technical, medical apparatus: $88.8 billion (2.9%)
- Articles of iron or steel: $85.4 billion (2.8%)
- Knit or crochet clothing, accessories: $78.2 billion (2.6%)
- Organic chemicals: $73 billion (2.4%)
Source: World’s Top Exports
In 2021 alone, China exported $3.026 trillion worth of products which then made their way into the global supply chain.
This contributed to two-thirds of all global exports.
Think about the phone or the computer that you’re reading this post on – that’s probably an export of China.
The car that you drove to work this morning in? That’s probably an export of China.
Even the equipment that examined you at your last doctor’s appointment was most likely an export of China.
So what does this lockdown mean for your life over the next little while?
It means that things may look a little different.
Here are some tips to help you adjust during this time:
1. Be very kind to your electronics – new computers, phones, and electronic devices will be harder to replace than usual. Buy that screen protector, invest in a sturdy case, don’t let your youngsters use your gadgets! Proceeding with extra caution when it comes to your electronics will help you avoid having to source new devices in a limited market.
2. Delay your home makeover – who doesn’t love a remodel? Well, at current, the supply chain. Items that have been historically easy to source, including construction materials, furniture, and fixtures, will now be short of supply, turning your fun reno project into a remodeling nightmare.
3. Maintain your health – limited medical supplies will make a trip to the doctor’s office a time-consuming and frustrating affair. Eat a balanced diet, participate in regular exercise, and take your vitamins to avoid health-related trips to the doctor’s office.
4. Bring back some of the classics – notice that one of the above categories is children’s games? Avoid having bored children on your hands by implementing games of days past including tag, grounders, capture the flag, hide and seek, and other traditional activities from a simpler era.
With Shanghai returning to pre-lockdown production levels, the above tips won’t need to be utilized for long (though a game of hide-and-seek is timeless), but this latest lockdown has many global decision-makers skeptical about the reliability of working with China as their sole supplier.
Conversations surrounding alternative production solutions are arising, begging many to wonder if China will re-gain its stronghold on the export industry.
We might live in a big world, but times like this remind us just how interconnected we are as a society.