China’s Zero-Covid policy causing pain

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Shanghai skyline. Photo: zhang kaiyv on Unsplash

Small businesses are struggling under China’s zero-Covid policy, another hit on global supply chains in the post-COVID era.

China represents 12 per cent of global trade, worth $22 trillion, and it is Australia’s biggest trade partner.

Fashion wholesaler Lily Chung, owner of ELady Fashion in Surry Hills, said her average delivery from China was two to three weeks, but it had extended to more than one month due to the Covid shut down.

“We import 80 per cent of clothes from China; our wholesale business was affected heavily because of the mass factory delays, Ms Chung said.

She also pointed to increasing sea and air freight fees that are adding to business pain, with the cost of importing goods tripling for some Australian businesses.

ELady Fashion: Facebook

Andrew Mckeller, chief executive of the Australian Chamber of Commerce and Industry, said Covid-related lockdowns risked a further deterioration of already critical supply constraints.

“Chinese lockdowns reaffirm the need to continue diversification of critical supply chains, ensuring that Australian business can source key components of production,” Mr Mckeller said.

The Reserve Bank of Australia released a report of the industries impacted by supply chain issues in Australia, revealing that education, wholesale trade and the services industry were the most impacted.

NSW Ports and Maritime Logistics chair Richard Bell said China’s zero-Covid policy was disrupting China’s exports and slowing down the supply chain worldwide.

“On the trans-Pacific trade lane cargo went from spending four weeks in a container on average to seven weeks,” Mr Bell said. “As the demand for containerised products, after an initial dip, increased to above pre-pandemic levels, this led to an acute shortage of containers.

“As port productivity also decreased due to quarantining, around 15 per cent [at the peak] of ships were stuck in congestion waiting to berth, so fewer ships were available to carry more cargo.”

Covid-19- related restrictions also contributed to a severe drop in human mobility. According to Australian Department of Education, Skills and Employment data, the number of Chinese students in Australia has dropped nearly 13 per cent yearly.

Chinese international students are a vital part of the workforce in many industries, and account for 21 per cent in Australia’s workforce. The Albanese government has proposed new working visa rules that allow selected bachelor degree holders to work for four years after graduating, up from two, while master’s students will be able to work for five years, up from three.

Amet Education & Migration Agency counsellor Jill Wang said Chinese international students accounted for 70 per cent of their business. “Hopefully, the new rules will encourage more students to come back,” she said.

Henry Wang, the head of Sydney law consultation service Pine Migration, said the firm has struggled since the early pandemic outbreak:

“It’s been difficult for people to come out from China,” he said. “The Chinese government has stopped issuing new passports to Chinese citizens unless you have a legitimate reason, or you have an official letter from an authority.”

Yinan Wang is a student doing the Master of Media Practice degree at the University of Sydney, and has completed her undergraduate degree at the Lancaster University in the UK. She has great interests in exploring social, global cultural and business stories.