Shanghai — home to China's leading financial center and some of its largest sea and airports — has been under lockdown for 12 days, and there's no sign of it ending. Small businesses have been hit hard, with shops and restaurants being forced to shut down. Tesla, as well as many Chinese and Taiwanese manufacturers, are unclear about when they can restart their factories. Meanwhile, port delays are getting worse, and air freight rates are soaring, putting even more pressure on global trade. The stringent restrictions have dispelled any expectations that the country may relax its zero-tolerance approach towards Covid-19.
"The surging cases in Shanghai convinced top leaders that there is no middle ground between zero-Covid and living with Covid. From now on, snap lockdown could be the prevailing strategy," said Larry Hu, chief economist for Greater China at Macquarie, in a research report this week.