3 reasons Shanghai’s lockdown matters to the global economy

Located on the east coast of China, Shanghai is the country’s biggest and most affluent city and one of the largest metropolises in the world. Together with the neighboring city of Kunshan — which locked down earlier this month — it plays More than 70,000 foreign-owned companies have offices in the city, more than 24,000 of which are Japanese companies, according to data from the But the Covid outbreak has made port delays worse and forced the suspension of many passenger flights, sending But the Covid restrictions have forced many factories to suspend operations in Shanghai and Kunshan, threatening to disrupt key supply chains for autos and electronics.Volkswagen and Tesla’s factories in Shanghai have been shut for weeks. Chinese electric-vehicle maker Nio has also been forced to halt production due to Covid-related disruptions in Shanghai and other Chinese cities.Pegatron, a key supplier for Apple (AAPL), has suspended production at its Shanghai and Kunshan plants until further notice. In addition, Taiwan’s Unimicron Technology, which supplies printed circuit boards to Apple, and Eson Precision — an affiliate of iPhone supplier Foxconn that also supplies components to Telsa — halted production at their Kunshan facilities earlier this month.”With Shanghai’s significant trade links to East Asia, this could have spillover impacts on regional supply chains,” Citi analysts also said in a research note late last week.”We think Korea, Taiwan, Vietnam and, to a lesser extent, Japan (on vehicles) look relatively exposed [to the disruptions],” they said.Other industries include pharmaceuticals. In October, AstraZeneca (AZN) opened a global R&D center in Shanghai.