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Here's why China's Covid lockdown of Shenzhen should worry Americans and the world

The lockdown in Shenzhen has heightened global supply concerns as the city is not only a tech powerhouse but also an important port city

The Chinese city of Shenzhen has been put on lockdown to handle an outbreak of Covid-19. The 17.5 million population of the city -- a tech powerhouse and a key port city -- has reportedly been asked to remain indoors for at least one week. Due to the recent orders from the local government, several manufacturers including Foxconn have suspended operations in the city.

Raymond Yeung, chief economist for Greater China at ANZ, said: “More cities may follow the practice of Shenzhen. If the lockdown is extended, China’s economic growth will be significantly affected.”

Louis Kuijs, Asia-Pacific chief economist at S&P Global Ratings, added: “Globally, the economic impact of Covid is declining as governments ease restrictions and many move towards a ‘living with Covid’ approach. However, for China, omicron is a key risk for domestic demand, output and, possibly, supply chains.”

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Other than Shenzhen, the city of Jilin was partially closed on Saturday, March 12, while the city of Changchun was placed on lockdown on Friday, March 11. Besides, Shanghai has shut down its schools and moved to online instruction.

Is China's COVID lockdown of Shenzhen concerning for the US?

According to reports, the recent lockdown in Shenzhen has heightened global supply concerns as the city is not only a tech powerhouse but also an important port city. The recent Covid restrictions are likely to slow down port operations causing disruption to the global supply chain.

In addition, due to the lockdown, manufacturing factories too have to shut their doors, which will possibly worsen supply chain and inflationary pain points.

Speaking of the US, some of the world’s largest ports are in Shenzhen, which is a vital depot in trade between Washington and Beijing. Also, Apple is highly dependent on Foxconn – a Taiwanese multinational electronics contract manufacturer. But due to the lockdown, Foxconn also has to halt its work in Shenzhen, which will obviously affect the American multinational technology company and its market.

Fortune reported that “when authorities halted operations at Shenzhen’s Yantian port to tackle a COVID outbreak last June, it caused a shipping backlog that took months to ease. Yantian is the world’s fourth largest port and processes roughly 90% of China’s electronics shipments.” Meanwhile, Shenzhen health official Lin Hancheng has defended the lockdown and told a media briefing, “If prevention and control is not strengthened in a timely and decisive manner, it could easily become large-scale community transmission.”

American public health scientist Eric Liang Feigl-Ding shared about Shenzhen’s lockdown on Twitter. He posted, “UPDATE—the 13-million population city of Shenzhen has locked down! With all non-essential enterprises stop operating, or required to work from home. Buses and subways all suspended. Govt services shut down except for epidemic essential staff. Holy shit.”

In another tweet, Feigl-Ding mentioned, “Shenzhen health official Lin Hancheng warns Sunday that this #BA2 strain is "highly contagious, spreads quickly and has a high degree of concealment", leading to widespread community transmission if control measures were not strengthened soon. 👀,” before adding, “Outbreak is still early in China 🇨🇳, but look at that near-vertical surge. The fact that it’s simultaneously happening in with lockdowns in multiple cities at once shows urgency that we haven’t seen before. And keep in mind Shenzhen & Shanghai are critical industrial cities!”