With Markets Already Slowing, China Faces New COVID Outbreaks

What happened China’s Zhejiang province is fighting its first COVID-19 outbreak this year. The area has reported 217 locally transmitted cases with confirmed symptoms in over a week since the first case got reported on December 6. The cities impacted are Ningbo, Shaoxing, and Hangzhou. In 2020, these municipalities generated more than 50 percent of the province's economic output of around 1.02 trillion (6.46 trillion yuan), according to Reuters. More than 50,000 people in Zhejiang are now being quarantined in designated facilities, and medical practitioners are monitoring the health status of nearly half a million citizens. Additionally, multiple companies have suspended production. The Business of Fashion reports that more than a dozen Chinese-listed companies have temporarily closed down factories in Zhejiang due to COVID-19 restrictions. Meanwhile, sporting events and travel tours have also been canceled, and domestic flights between Ningbo Lishe International Airport and Shenzhen and Beijing have stopped. The Jing Take Considering that the prosperous province of Zhejiang accounts for around 6 percent of China's GDP, any delay or suspension of operations could hurt that economy. Furthermore, the ongoing global supply chain chaos should get acerbated now that manufacturing output is declining in the region. As China continues to navigate this new COVID-19 outbreak, businesses in the West will suffer because of product shortages and delays. As such, Western consumers will be forced to wait longer for their overseas goods. And with clothing factories and textile dye companies shutting down, it is safe to say that the textile and apparel market might get hit hardest. Like all industries, luxury will also be impacted. Due to home confinement policies, those consumers might choose to delay their holiday shopping until physical stores are again fully operational and the COVID-19-related restrictions have been lifted. The Jing Take reports on a piece of the leading news and presents our editorial team’s analysis of the key implications for the luxury industry. In the recurring column, we analyze everything from product drops and mergers to heated debate sprouting on Chinese social media.

Sectors

Insights

Company

With Markets Already Slowing, China Faces New COVID Outbreaks