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COVID-19 Omicron Impact: Outbreak in China looms large over global supply chain

China has locked down two cities, while more face restrictions as the country is fighting multiple outbreaks of the Delta and Omicron COVID-19 variants

January 12, 2022 / 01:15 PM IST
A security guard wearing a face mask to protect against COVID-19 stands at the entrance to a closed tourist site in Xi'an in northwestern China's Shaanxi Province, Thursday, Jan. 6, 2022. China's lockdown of big cities to fight coronavirus outbreaks is prompting concern about more disruptions to global industries after two makers of processor chips said their factories were affected. (Chinatopix via AP)

A security guard wearing a face mask to protect against COVID-19 stands at the entrance to a closed tourist site in Xi'an in northwestern China's Shaanxi Province, Thursday, Jan. 6, 2022. China's lockdown of big cities to fight coronavirus outbreaks is prompting concern about more disruptions to global industries after two makers of processor chips said their factories were affected. (Chinatopix via AP)

World manufacturers and shippers are anxious about supply chain disruptions as China battles its Omicron outbreak.

Notably, factories stayed open throughout the pandemic in 2020 and 2021 under the country’s ‘COVID-zero’ strategy, but continuous detections of local infections since mid-October may have ‘knock-on consequences’ for ports and factories as cities lock down, Bloomberg reported.

Thomas O’Connor, a supply chain expert at Gartner Inc. in Sydney told the publication that China “remains the centre of global manufacturing” and significant COVID-19 related shutdowns would have “massive impact on the global economic environment”.

“A surge in omicron across China and the rest of Asia could trigger the mother of all supply chain stumbles this year,” Frederic Neumann, co-head of Asian economic research at HSBC Holdings Plc, told the publication.

For example, disruptions have already been felt due to the shutdown of clothing factories and gas deliveries near Ningbo seaport; the city-wide lockdowns in Xi’an and another province which have affected computer chip manufacturers; restrictions in the technology and manufacturing hub of Shenzhen city which has caused concerns about delays at nearby Yantian port – among the biggest container ports in Asia, which was partly shut for a month last year after an outbreak.

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COVID-19 Vaccine

Frequently Asked Questions

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How does a vaccine work?

A vaccine works by mimicking a natural infection. A vaccine not only induces immune response to protect people from any future COVID-19 infection, but also helps quickly build herd immunity to put an end to the pandemic. Herd immunity occurs when a sufficient percentage of a population becomes immune to a disease, making the spread of disease from person to person unlikely. The good news is that SARS-CoV-2 virus has been fairly stable, which increases the viability of a vaccine.

How many types of vaccines are there?

There are broadly four types of vaccine — one, a vaccine based on the whole virus (this could be either inactivated, or an attenuated [weakened] virus vaccine); two, a non-replicating viral vector vaccine that uses a benign virus as vector that carries the antigen of SARS-CoV; three, nucleic-acid vaccines that have genetic material like DNA and RNA of antigens like spike protein given to a person, helping human cells decode genetic material and produce the vaccine; and four, protein subunit vaccine wherein the recombinant proteins of SARS-COV-2 along with an adjuvant (booster) is given as a vaccine.

What does it take to develop a vaccine of this kind?

Vaccine development is a long, complex process. Unlike drugs that are given to people with a diseased, vaccines are given to healthy people and also vulnerable sections such as children, pregnant women and the elderly. So rigorous tests are compulsory. History says that the fastest time it took to develop a vaccine is five years, but it usually takes double or sometimes triple that time.

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Cost is another concern as the global economy struggles due to a shortage of frontline workers, pilots, supermarket staff and truck drivers, amid Omicron and the supply crunch has sent prices soaring. Shipper container and raw materials costs remain much higher than pre-crisis levels and Oxford Economics analysts expect this to continue through the year.

To be sure, the impact in China is not as strong as seen in Australia, Japan or the United States, but the upcoming Winter Olympics and political events lined up later this year may make policymakers more cautious.



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Moneycontrol News
first published: Jan 12, 2022 01:15 pm
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