Beautiful Virgin Islands

Thursday, Oct 09, 2025

3 reasons Shanghai's lockdown matters to the global economy

3 reasons Shanghai's lockdown matters to the global economy

China is struggling to contain an outbreak of Covid-19 in Shanghai despite a 17-day lockdown that is keeping most of its 25 million residents trapped at home.

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 an outsized role in the global economy.

With no sign that the Chinese government is prepared to ease restrictions soon, concern is mounting about the economic damage they are causing, and the shock waves an extended lockdown will send around the world.

Shanghai is the epicenter of the current Covid outbreak, but it's not alone — analysts at Nomura estimate that full or partial lockdowns are in place in 45 Chinese cities, affecting a quarter of the population and about 40% of the economy.

Premier Li Keqiang warned on Monday for a third time in a week of the threat the upsurge in Covid posed to the Chinese economy. Here's three reasons why the rest of the world should be watching Shanghai closely, too.

A lockdown continues in Shanghai on April 6, 2022, to curb coronavirus infections.


Business and finance


It has the largest GDP of all Chinese cities — 4.32 trillion yuan ($679 billion), the third largest stock market globally by value of the companies that trade there, and the fifth greatest number of billionaires in the world.

Shanghai is also the most attractive destination for international business eying a presence in mainland China.

By the end of 2021, more than 800 multinational corporations had established regional or country headquarters in Shanghai, according to city authorities.

Among them, 121 are Fortune Global 500 companies, including Apple (AAPL), Qualcomm (QCOM), General Motors (GM), Pepsico (PEP) and Tyson Foods (TSN).

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 Japanese government.

With a total market capitalization of $7.3 trillion, the Shanghai Stock Exchange — established in 1990 — trails only New York and London. Trading continues despite the lockdown, but some banks and investment firms have been asking staff to sleep by their desks to keep the market functioning.

The pool of companies listed in Shanghai is heavily focused on large, state-owned enterprises that play a central role in the Chinese economy. They include the world's most valuable liquor maker Kweichow Moutai, banking and insurance giants like ICBC and China Life Insurance (LFC), and state oil company PetroChina (PCCYF).

The Shanghai exchange is also home to China's answer to Nasdaq -— the Star Market.

Trade and logistics


Shanghai accounts for 3.8% of China's GDP. But it has a much higher share — 10.4% — of China's trade with the rest of the world, according to official statistics for last year.

The Port of Shanghai is the world's busiest for container traffic. It moved 47 million 20-foot equivalent units of cargo in 2021, four times the volume handled by the Port of Los Angeles. The number made up 16.7% of China's total container shipments last year.

Shanghai is also a major aviation hub in Asia. The city's airports — Pudong International Airport and Hongqiao Airport — handled 122 million passengers in 2019, making the city the fourth busiest hub in the world after London, New York, and Tokyo.

But the Covid outbreak has made port delays worse and forced the suspension of many passenger flights, sending air freight rates soaring and putting even more pressure on global supply chains.

Shanghai port remains operational, but industry data released in late March showed that the number of vessels waiting to load or discharge had skyrocketed to a record high. State media also reported that many truck drivers were struggling to get containers in and out of the port on time because of travel restrictions.

Manufacturing and tech


The Greater Shanghai Area, which includes Kunshan and several other eastern cities, is a major manufacturing hub for industries from cars to semiconductors.

Volkswagen (VLKAF) and General Motors both run factories in Shanghai in partnership with state-owned automaker SAIC Motor. Shanghai is also home to
Tesla's (TSLA) first gigafactory in Asia. The US electric vehicle maker delivered more than 65,000 cars from its Shanghai factory last month, making it the best-selling EV brand in China.

In January, Ford launched its sixth global design center in Shanghai, highlighting the vibrancy of the city and the growing number of young Chinese designers with a mix of "fresh thinking, local knowledge and global outlook."

TSMC (TSM), the world's largest contract chip maker, runs a major semiconductor factory in suburban Songjiang. Top Chinese chip makers SMIC (SMICY)and Hua Hong Semiconductor have factories in Pudong, in the east of the city.

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.

Newsletter

Related Articles

Beautiful Virgin Islands
0:00
0:00
Close
France: Less Than a Month After His Appointment, the New French Prime Minister Resigns
Hungarian Prime Minister Viktor Orbán stated that Hungary will not adopt the euro because the European Union is falling apart.
Sarah Mullally Becomes First Woman Appointed Archbishop of Canterbury
Mayor in western Germany in intensive care after stabbing
Australian government pays Deloitte nearly half a million dollars for a report built on fabricated quotes, fake citations, and AI-generated nonsense.
US Prosecutors Gained Legal Approval to Hack Telegram Servers
Macron Faces Intensifying Pressure to Resign or Trigger New Elections Amid France’s Political Turmoil
Standard Chartered Names Roberto Hoornweg as Sole Head of Corporate & Investment Banking
UK Asylum Housing Firm Faces Backlash Over £187 Million Profits and Poor Living Conditions
UK Police Crack Major Gang in Smuggling of up to 40,000 Stolen Phones to China
BYD’s UK Sales Soar Nearly Nine-Fold, Making Britain Its Biggest Market Outside China
Trump Proposes Farm Bailout from Tariff Revenues Amid Backlash from Other Industries
FIFA Accuses Malaysia of Forging Citizenship Documents, Suspends Seven Footballers
Latvia to Bar Tourist and Occasional Buses to Russia and Belarus Until 2026
A Dollar Coin Featuring Trump’s Portrait Expected to Be Issued Next Year
Australia Orders X to Block Murder Videos, Citing Online Safety and Public Exposure
Three Scientists Awarded Nobel Prize in Medicine for Discovery of Immune Self-Tolerance Mechanism
OpenAI and AMD Forge Landmark AI-Chip Alliance with Equity Option
Munich Airport Reopens After Second Drone Shutdown
France Names New Government Amid Political Crisis
Trump Stands Firm in Shutdown Showdown and Declares War on Drug Cartels — Turning Crisis into Opportunity
Surge of U.S. Billionaires Transforms London’s Peninsula Apartments into Ultra-Luxury Stronghold
Pro Europe and Anti-War Babiš Poised to Return to Power After Czech Parliamentary Vote
Jeff Bezos Calls AI Surge a ‘Good’ Bubble, Urges Focus on Lasting Innovation
Japan’s Ruling Party Chooses Sanae Takaichi, Clearing Path to First Female Prime Minister
Sean ‘Diddy’ Combs Sentenced to Fifty Months in Prison Following Prostitution Conviction
Taylor Swift’s ‘Showgirl’ Launch Extends Billion-Dollar Empire
Trump Administration Launches “TrumpRx” Plan to Enable Direct Drug Sales at Deep Discounts
Trump Announces Intention to Impose 100 Percent Tariff on Foreign-Made Films
Altman Says GPT-5 Already Outpaces Him, Warns AI Could Automate 40% of Work
Singapore and Hong Kong Vie to Dominate Asia’s Rising Gold Trade
Trump Organization Teams with Saudi Developer on $1 Billion Trump Plaza in Jeddah
Manhattan Sees Surge in Office-to-Housing Conversions, Highest Since 2008
Switzerland and U.S. Issue Joint Assurance Against Currency Manipulation
Electronic Arts to Be Taken Private in Historic $55 Billion Buyout
Thomas Jacob Sanford Named as Suspect in Deadly Michigan Church Shooting and Arson
Russian Research Vessel 'Yantar' Tracked Mapping Europe’s Subsea Cables, Raising Security Alarms
New York Man Arrested After On-Air Confession to 2017 Parents’ Murders
U.S. Defense Chief Orders Sudden Summit of Hundreds of Generals and Admirals
Global Cruise Industry Posts Dramatic Comeback with 34.6 Million Passengers in 2024
Trump Claims FBI Planted 274 Agents at Capitol Riot, Citing Unverified Reports
India: Internet Suspended in Bareilly Amid Communal Clashes Between Muslims and Hindus
Supreme Court Extends Freeze on Nearly $5 Billion in U.S. Foreign Aid at Trump’s Request
Archaeologists Recover Statues and Temples from 2,000-Year-Old Sunken City off Alexandria
China Deploys 2,000 Workers to Spain to Build Major EV Battery Factory, Raising European Dependence
Speed Takes Over: How Drive-Through Coffee Chains Are Rewriting U.S. Coffee Culture
U.S. Demands Brussels Scrutinize Digital Rules to Prevent Bias Against American Tech
Ringo Starr Champions Enduring Beatles Legacy While Debuting Las Vegas Art Show
Private Equity’s Fundraising Surge Triggers Concern of European Market Shake-Out
Colombian President Petro Vows to Mobilize Volunteers for Gaza and Joins List of Fighters
×