The People’s Bank of China (PBOC) has pledged financial support for trucks and logistics companies amid the country’s worst COVID outbreak in two years.
As Bloomberg News reported on Friday, the move is designed to support China’s supply chain, with the central bank asking lenders to “reasonably” extend and renew loans for the industry.
The PBOC says financial institutions will be encouraged to increase their support for the transportation industry with policies such as lending and rediscounting tools. The bank added that it also plans to increase credit to air cargo companies.
China has seen an increase in supply chain disruptions in places such as Shanghai – home to the world’s largest container port – following the COVID shutdowns. Congestion at ports and road checks have lengthened delivery times, hampered production and reduced consumption, making China’s 5.5% annual growth target difficult to achieve.
The Bloomberg report says company figures in China warn of a slowdown in production due to supply chain issues. Among them is He Xiaopeng, CEO of electric vehicle company Xpeng Inc. In a social media post on Thursday, he warned that Chinese automakers could be forced to halt production in May if shutdowns persist in Shanghai. .
And Richard Yu, general manager of Huawei Technologies Co.’s smart car solutions unit, echoed similar concerns, saying the production of entire tech and industrial sectors whose supply chains depend on Shanghai could shrink. stop next month if the city does not resume operations. .
Read more: Container shipping rates plummet amid US inflation and Shanghai pandemic lockdown
As PYMNTS reported on Friday, China’s supply chain issues may have had a knock-on effect on shipping container rates, which are falling while prices for other things are rising, as the pandemic disrupts the flow of goods from China, reducing the need for container shipping. .
According to the World Container Index, an independent container market data resource, shipping along major routes from Shanghai to Los Angeles and Shanghai to New York fell 17% and 16% respectively.
But the most dramatic statistic: the WCI has fallen 13% since March 10, suggesting that spring retail sales will suffer as COVID in China has a bigger impact on global supply chains than many realize. had planned it.