Due to the strict corona measures in China, only a few German companies can operate there and resume production. The crisis surrounding the war in Ukraine and the recovery of capacities in other countries are also having an impact.
“The supply chain disruptions caused by the war in Ukraine and the People’s Republic of China’s zero-COVID strategy are having a massive impact on foreign trade,” said Dirk Jandura, President of the BGA Foreign Trade Association, earlier this month. The German Chamber of Foreign Trade is also looking east with concern. Due to the Chinese government’s corona measures, only a few German companies can operate in China and resume production. Foreign employees are increasingly planning to leave the country due to the strict COVID-19 strategy, a snap survey in China has revealed.
In the on Thursday published In a survey by the German Chamber of Foreign Trade (AHK), 73 percent of the participants stated that they operate in cities or regions where there are partial or complete curfews. Only about every fifth German company has a special permit to continue production despite restrictions.
These companies also have problems and, according to the survey, can only run at less than half capacity on average. Logistics problems, low availability of staff and uncertainties caused by sudden changes in regulations are the main reasons currently standing in the way of higher production, the chamber said.
Around 28 percent of the skilled workers sent to China from Germany are planning to leave the country because of the strict corona measures. “It will be extremely difficult for German companies to replace these employees with new employees from abroad,” said Maximilian Butek, managing director and board member of the German Chamber of Commerce in Shanghai. The current conditions for German companies in China are “unacceptable”.
In areas affected by lockdowns, businesses can only resume operations under restrictions. Currently, 19 percent of the German companies surveyed have permission to produce in such areas under difficult conditions.
After around two years of effective pandemic control, the highly contagious omicron variant is severely testing the Chinese government’s zero-tolerance policy. Despite the high economic costs, China’s leadership wants to stick to its course, as the Politburo’s Standing Committee recently reaffirmed.
The draconian zero-COVID policy is slowing down the second largest economy, with German exporters suffering particularly from the slump in trade. Not only production, but also freight traffic is severely affected. China’s export growth fell to its lowest level in two years. Exports increased in April – calculated in US dollars – by 3.9 percent compared to the same month last year, as reported by Chinese customs on Monday in Beijing. It’s the slowest growth since June 2020, at the start of the pandemic. Imports remained unchanged.
Trade with Germany has collapsed noticeably. China’s imports of German goods fell by 9.8 percent. But Chinese exports to Germany also fell unusually sharply by nine percent. With the European Union, there was still an export increase of 7.9 percent. But imports also fell 12.5 percent.
Overall, German industry fears a downward spiral for the export economy. “Dark clouds are gathering over the German economy given the Ukraine war and the Chinese government’s zero-COVID strategy,” Joachim Lang, chief executive of the Federation of German Industries (BDI), said earlier in May. The global supply chains are already under massive pressure. “A gas embargo is also hanging over companies like the sword of Damocles – with incalculable social, economic and security policy consequences.”
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