German companies fear supply chain pain from China’s battle with Omicron

Workers in protective gear stand at the entrance to a residential area of ​​a university under lockdown following the coronavirus disease (COVID-19) outbreak in Xian, Shaanxi province, China December 20 2021. China Daily via REUTERS/File Photo

BERLIN, Jan 25 (Reuters) – German companies doing business in China fear the Omicron variant of the coronavirus could trigger tougher lockdown measures from Beijing that could worsen supply chain problems, the House of Commons said on Tuesday. DIHK trade.

“The Chinese strategy with targeted lockdowns has been very successful so far,” Jens Hildebrandt, board member of DIHK China, told Reuters in an interview.

But the more contagious variant of Omicron could challenge Chinese authorities’ zero-COVID approach, especially as more Chinese citizens will travel across the country due to the upcoming holiday season, Hildebrandt said.

“There will be a lot of travel despite the warnings,” he said.

The International Monetary Fund (IMF) on Friday called on China to reassess its zero-COVID approach given the emergence of the highly contagious variant of Omicron.

IMF Managing Director Kristalina Georgieva said the strategy, which included sealing off entire cities with millions of citizens, had increasingly proven to be a burden on the national and global economy.

“The criticism of the IMF is not entirely unjustified,” said Hildebrandt.

But he added that Beijing would likely stick to its zero COVID strategy, in part because scientific studies suggested Chinese vaccines were not as effective against Omicron as mRNA vaccines from Western countries.

The DIHK’s concerns were echoed by the industry association BDI.

“Should the Omicron variant also be transmitted faster and easier to China, this could once again become a bottleneck for global supply chains and fuel a recession in certain sectors of German industry,” he said. BDI in its “Global Growth Outlook” published on Monday.

With the start of the Olympics in Beijing next week, thousands of foreigners would enter the country and increase the risk of infection from Omicron, which could lead to stricter lockdowns, BDI warned.

This could pose new challenges for producers and exporters as well as companies at the end of the supply chain, he said.

“The bottlenecks would also likely be accompanied by higher prices, which would continue to affect inflation,” BDI said. “The development of the coronavirus pandemic in China therefore poses a risk to the recovery process of German industry.”

Reporting by Christian Kraemer Writing by Michael Nienaber Editing by Mark Potter

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