Traders Start Freaking Out Over Fresh Supply Chain Collapse As Covid Sweeps Across China

It may have taken a while, but it was always just a matter of time before China – creator of the covid virus (with funding from Fauci) and trillions in economic devastation – succumbs to the pandemic.

As we reported yesterday, the western Chinese city of Xi’an has begun widespread disinfection measures since late Sunday to counter a jump in Covid infections that forced the lockdown of 13 million residents. In images reminiscent of January 2020, authorities are spraying disinfectants across the city and asking residents to close windows and avoid touching architectural surfaces and vegetation on streets. Private cars are not allowed on roads, while lockdown rule-breakers are publicly shamed and paraded through the streets carrying placards with their names in Cultural Revolution-style disciplinary measures.

NEW – Chinese lockdown rule-breakers publicly shamed and paraded through the streets carrying placards with their names in Cultural Revolution-style disciplinary measures. pic.twitter.com/vGVvveRsmZ

— Disclose.tv (@disclosetv) December 29, 2021

The move came as daily infections spike to around 150 on Sunday and Monday, one of the highest daily increases since the original covid wave flooded out of Wuhan, as health authorities seek to uncover more cases with a fourth round of mass testing.

Then on Monday, with just over a month until the 2022 Winter Olympics are set to kick off in Beijing on Feb. 4, China reported a total of 162 domestic Covid infections, with 150 of those from Xi’an, the highest daily caseload since Jan. 22. A surge of that scale is rarely seen in China, which is the only major country in the world still aggressively trying to eliminate the virus via closed borders and stringent domestic curbs under what’s called a Zero Covid strategy.

Remarkably, the Xi’an outbreak, which has seen more than 600 cases in less than three weeks and is being blamed on the delta variant, underscores the difficulty China faces in returning domestic infections to nil as the virus mutates. While the nation claims it has found just a handful of omicron infections among travelers from other countries, it also claims it hasn’t seen the far more infectious and immunity-evading variant spreading into the community.

It’s only a matter of time before not even China can cover up the fact that hundreds of millions of Chinese are infected with Omicron, which in turn means it is only a mater of time before we get a new round of collapsing supply China.

Picking up on this theme, Commodore Research founder Jeffrey Landsberg noted in his latest daily that new daily coronavirus cases continue to climb in China, and “each of the last three days have seen at least 200 new daily coronavirus cases reported in China” marking a feat previously not seen since March 2020. 

As a result, “new restrictions remain in place in China, including the city of Xi’an (home to 13 million people) remaining in lockdown.  Residents are still not allowed to leave the city and are only allowed to leave their homes to shop for essentials or get tested.  Overall, it remains to be seen when the outbreak will subside, and in our view it is also becoming increasingly likely that foreign visitors will not be allowed into China for the Olympics.  No signs yet, though, that the Olympics will not be held in February as planned.”

But a far bigger wildcard than the Olympics is the question we asked last night, namely what happens if (or rather when) China can no longer contain Omicron and is forced to shut down again?

*CHINA REPORTS 152 LOCAL COVID CASES DEC. 28, WITH 151 IN XI’AN

what happens if China can’t contain omicron and shuts down.

— zerohedge (@zerohedge) December 29, 2021

And speaking of the devil, just hours later we got the first confirmation that the latest Chinese covid breakout may be the most serious yet, after Korean tech giant Samsung Electronics said it’s conducting flexible adjustment in its chip production line in Xi’an, China, amid coronavirus spread.

Due to the ongoing COVID-19 situation, we have decided to temporarily adjust operations at our manufacturing facilities in Xi’an, China.

This decision was made in accordance with our commitment to protecting the health and safety of our employees and partners, which remains our top priority.

We will also take all necessary measures, including leveraging our global manufacturing network, to ensure that our customers are not affected.

So what happens next? As a reminder, the last time China’s megaports of Yantian or Ningbo were closed, supply chains collapsed and shipping rates went astronomical after a modest lag (see “Shippers Frantic After China’s Busiest Port Shuts Container Terminal Due To Covid” and “Brace For Astronomical Shipping Costs As China Goes Into Lockdown Mode“).  It is only a matter of time before the rapidly spreading Omicron leads to a similar port lockdown, and a fresh round of paralysis in trans-Pacific shipping.