As the world’s second-largest economy struggles to regain its manufacturing footing, U.S. container ports could slow down in the coming months.
China’s economy grew by a reported 8.1 percent in 2021, a figure that “masks a significant loss of growth momentum,” Eswar Prasad, a professor of trade policy and economics at Cornell University, reportedly said.
The world looked on as China staged perhaps the most dramatic economic rebound from the height of the pandemic. Its resurgence was largely based on restarting its manufacturing plants while other countries struggled through lockdowns, high infection rates, and labor shortages. But while more than 110 cargo vessels idled off the coast of Long Beach and Los Angeles ports, the Asian giant’s economy was already in decline.
Its growth dwindled to 4.9 percent in the third quarter of 2021 and a stunning 4 percent in the fourth quarter. Those economic measures are reportedly the worst since the economic disruption during the spring of 2020.
“At present, the downward pressure on China’s economy is still relatively big, and growth of residents’ employment and income is restricted,” Ning Jizhe, head of the National Bureau of Statistics, reportedly said.
The Omicron variant appears to be rapidly spreading across Asia and poses a significant challenge for China. Its zero-Covid policies involve strict quarantines and travel restrictions. And the outbreak also comes as the country prepares to host the Winter Olympics.
Outbreaks of the latest strain hit the Capital city of Beijing after wide-reaching regions hoped to contain the spread. Upwards of 14 provincial-level regions in China — including Shanghai — sustained Omicron infections in recent weeks. Logistics and supply chain experts anticipate significant upheaval as China runs headlong into lockdown and plants slow or shutter.
“So, we would start to see material downward pressure on things like producer prices, input prices, that kind of thing. But given China’s zero-Covid policy and how they tend to shut down important ports and factories — that really increases disruption,” Katrina Ell, a senior economist for Asia-Pacific at Moody’s Analytics, reportedly said. “The zero-Covid policy means that the economic recovery is a bit more bumpy, particularly on the consumption side of things.”
The image of container ships idling off the coast was expected to resolve itself as holiday buying eased. Seeing a clear ocean horizon may alleviate pressure on port officials, but consumers could experience a shortage of products and materials due to lack of supply. China posted a trade surplus with the U.S. of $396.58 billion for 2021, according to its General Administration of Customs data. However, market experts such as Goldman Sachs have downgraded China’s potential growth from 4.8 percent to 4.3 percent already.
While those figures mean little to truckers hauling containers from West Coast and Gulf Ports, waning manufacturing output could mean the fever-pitch workload could lessen.
Ooh well get rich while u can , ride gotta end soon
Loose lips sink ships.