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Rumors have been circulating that factories in China may be idled for up to three-months prior to this year’s September G20 Summit, to be held in Hangzhou, which could put extra pressure on the supply chain and have a ripple effect on air cargo. However, local sources have told Air Cargo World that the shutdown is likely to be limited only to little more than two weeks.China flag with plane-crop
A quick look at Chinese-language local media source reveals that the issue has likely been blown out of proportion by soon-to-be affected companies, and that, while a confirmed official mandate has yet to be issued, production is likely to be idled for a maximum of 16 days, not three months. A report from The China Textile Newspaper claimed that factories within the city of Shaoxing, 65 kilmeters away from Hangzhou, had been notified that production would be idled for a maximum period of 16 days, with limits bounded between Aug. 23 and Sept. 7. Hu Keqin, President of the Zhejiang Institute of Modern Textile Industry, located near Hangzhou, added that he was expecting a shutdown of seven to ten days during this period, in an interview he gave with China’s Economic Observer.
Air Cargo World reached out to the branch offices of top-10 freight forwarders in Shanghai and was able to confirm only that, to date, there has been no official announcement.
News that production could be idled as soon as June has been circulating since June 2015, but has since been dismissed by most local officials as nothing more than a rumor. Following reports from local printing and dyeing organizations, Li Qiangyu, a representative of the Hangzhou Municipal Government, confirmed in a local media interview that Hangzhou would “shut down some enterprises for a short period during G20 summit.” Li said that such closures would only last about a week.
On March 18, rumors resurfaced when the Shanghai Branch of MIQ Logistics issued a press-release warning importers that, in order to meet government-mandated clean-air objectives, factories within a 300-kilometer radius of Hangzhou may idle production for up to three months prior to the Summit’s Sept. 4 commencement. MIQ stated it had received “anecdotal evidence that factories in Shanghai and Hangzhou” were preparing to stop production as early as June. Given that Zhejiang Province is home to many export-intensive industries, including 80 percent of China’s dye industry and a shrinking-yet-still-significant textile industry, idling production would have a significant impact on cargo traffic ex the region.
A statement from the China Briefing, asserted that, contrary to a prolonged shutdown, local officials were working to bring factories up to a higher level of emissions standards and to punish violators, well before the summit. “Though it is still six months off, the Hangzhou environmental protection bureau, on orders from the central government, is rigorously inspecting the emissions of businesses in the city, mainly in heavy industries. Some 75 dyeing plants in Shaoxing are to be closed and renovated before the meeting with another 10 to be shut down in the Shaoxing Paojiang Economic and Technology Development Zone” In February, China’s Global Times reported that seven business owners had already been detained for failing to bring their companies up to par with environmental standards.
If China’s historical response to major international conferences is anything of an indicator, a three-month supply-chain disruption is unlikely in the lead-up to the G20 Summit. According to the SCMP, when Beijing played host to an Asia-Pacific Economic Cooperation Summit in 2015, factories were, in most cases, only shut down for a two-week period. Similar clean-air mandates have typically affected production beginning only a day or so before and after the event.
As the G-20 summit nears, and even after, the production of inputs to the textile industry continue to move outside of Zhejiang Province. With neighboring provinces capable of handling excess orders during the period, supply-chain interruptions are likely to be limited.