China Finds Omicron in Another Port City, Further Threatening Supply Chains

© Reuters.

(Bloomberg) -- China detected omicron in a second major port city, deepening concern of a wider outbreak at Beijing’s doorstep and raising the prospect that more foreign businesses might follow Toyota Motor (NYSE:TM) Corp. in halting operations along the northeastern coast.

Chinese officials said Thursday that at least one person has the more transmissible omicron variant in Dalian, a city of seven million. The patient showed no symptoms, but tested positive after returning from their college in the nearby city of Tianjin, where at least 137 other cases were traced as of Wednesday. A second person in Dalian has also tested positive with the virus, but the variant is unknown.

Dalian joins Tianjin as the second crucial port city with confirmed omicron cases. Their ports are among the twenty largest in the world -- processing a combined total of 25 million TEU in 2020 -- and serve as major production hubs for foreign companies such as Airbus and Volkswagen (DE:VOWG_p). Amid Covid-induced delays near Beijing and elsewhere, ships are heading for Shanghai, causing growing congestion there and delaying schedules for container ships by about a week, according to freight forwarders. The delays could ripple as far as the U.S. and Europe.

A broader spread of omicron is bad news for China. With just three weeks to go before the winter Olympics are set to begin in Beijing, China has put in place some of the world’s toughest measures to stamp out the virus. Officials in Tianjin closed schools, restaurants and entertainment facilities after dozens of people tested positive. Travel has more or less halted. 

As the city ramped up mass testing, Toyota suspended operations this week at its joint-venture carmaking plant in Tianjin, a city of around 13 million. Others may follow suit. Japanese companies including Sony (NYSE:SONY) Group Corp. and Panasonic (OTC:PCRFY) Corp. have operations in Dalian.

China’s National Health Commission said 124 locally transmitted cases were found on Thursday, including 41 in Tianjin, where the omicron variant was first identified, and 76 in nearby Henan province. Another nine domestic cases, including the two in Dalian, are asymptomatic infections, health authorities said.

Located 30 minutes by train from Tianjin -- and a few hours from Dalian -- Beijing has also ordered residents to stay put. With the Olympics and Chinese New Year drawing closer, people have been encouraged to spend the holidays at home, the city’s presser said in late December, though it is still unclear if developments in Dalian will change the calculus.

©2022 Bloomberg L.P.