Lockdown in China: Economic and Production Impacts

China’s “zero Covid” lockdown policy is wreaking havoc on the global supply chain, with the recent lockdown having a more far-reaching impact on the supply chains than the initial Wuhan outbreak. Recent port closures, rising freight costs, decreased road freight and disrupted production have negatively impacted global manufacturing. Many European companies are considering shifting their investments out of China while top investors are keeping their additional investments on hold. Companies are also looking to Mexico as they consider shifting automotive production out of the country. While major manufacturers have resumed production under the “closed-loop” system in the major hubs in China, analysts believe that if these disruptions continue, all OEMs may have to stop production in 2022.