Supply chains of materials crucial in the fight against the COVID-19 pandemic, including personal protective equipment (PPE), have been disrupted as several areas in China struggled on Friday due to the worst floods to sweep the country in decades.
The provinces of Anhui, Zhejiang and Jiangxi, and the city of Wuhan in the Hubei province, have declared red alerts as lashing rains have led to the swelling of lakes and rivers. Michael Einhorn, president of Dealmed, a US medical supply distributor, said, "It's just creating another major roadblock here in terms of PPE getting into the United States - it is the worst of times for it to happen but that's what we're dealing with right now."
Disrupting Supply Chains
Wuhan, on the banks of the Yangtze river where the novel coronavirus emerged late last year, warned residents to take precautions as water levels fast approached their maximum guaranteed safety level.
The summer rainy season brings floods to China almost every year but the impact of the disruption they cause is being felt further afield as Chinese goods become more important in global supply chains for various items, including PPE. "We cannot get product out for over a week, which is a very long time in our business," Einhorn said, adding that the delays could last up to three weeks.
Xiantao, just west of Wuhan, is China's biggest manufacturer of nonwoven fabrics used in PPE production. A third of China's total exports of nonwoven fabric products are from the city. With the relentless rain, more misery seems inevitable.
The giant Three Gorges reservoir, which has been holding back more water to try to ease downstream flood risks, is more than 10 meters higher than its warning level, with inflows now at more than 50,000 cubic meters a second.
Economic Activities Affected
The Poyang Lake in Jiangxi province, which is formed from the overspill of the Yangtze, is 2.5 meters higher than its warning level. It has expanded by more than 2,000 square kilometers during thus flood season, and parts of the surrounding town have been inundated. Further east, the Tai lake near Shanghai has also declared a red alert after its water level rose to nearly a meter higher than its safe level.
Economic activity in other parts of China, especially construction and steel and cement demand, has also been hurt by the flooding, analysts say, suggesting some loss of momentum after a stronger than expected bounce in the second quarter from the coronavirus crisis.
"We estimate recent floods in Yangtze River regions could lead to a gross drag of 0.4-0.8 percentage points on third-quarter GDP growth," analysts at Morgan Stanley said in a note to clients on Friday.
(With inputs from agencies)