How China’s Zero-Covid Policies Are Disrupting Cross-Border Trade

Date: Wednesday, January 19, 2022
Source: The Wall Street Journal

China’s zero-Covid policies are putting Chinese cities into lockdown and grounding air travel anew. They are also disrupting trade routes across its land borders that are lifelines for the region’s farmers and merchants.

In neighboring Vietnam, thousands of trucks laden with dragon fruit, jackfruit, watermelons and other produce have been backed up at the border awaiting passage for weeks. Their trips were disrupted after Chinese authorities toward the end of last year suspended operations at a number of gates or slowed traffic citing a need to contain Covid-19.

With fruit rotting, some traders cut their losses. Nguyen Ngoc Phuong Thao, who exports exclusively to China, sold five truckloads of dragon fruit domestically at one-tenth the price they would have fetched on the other side of the border. The businesswoman redirected three trucks to a sea port, paying more to rush the perishable cargo to Shanghai. “Selling domestically was like dumping it,” she said.

Others are still waiting. For the past eight days, Lung Van Nhien and the boxes of jackfruit he was hired to drive to China have been sitting in a parking lot near the border. The fruit is beginning to darken and, if he can’t get through, he will have to find a place to dump it all, he said.

For Vietnam’s farmers and traders, not being able to reach Chinese consumers is crippling.

Take dragon fruit, for instance. China’s growing appetite helped drive Vietnam’s exports of the red-skinned fruit to $1 billion in 2021—nearly 20 times the $57 million in 2010, according to data from Vietnam’s trade and agriculture ministries. Around 80% of those exports go to China. The Southeast Asian country went from producing less than 25,000 metric tons of the fruit annually two decades ago to an average of about 1.4 million tons in recent years, with many farmers switching over from traditional rice cultivation.

Australia and Europe have also emerged as destinations for Vietnam-grown dragon fruit, but demand from those places pales in comparison. A year’s sales to these markets is equal to two to three days of shipments to China, said Truong Minh Trung, a farmer in the fruit-producing Long An province.

“The dragon fruit that ripens now is considered all lost,” he said, after China obstructed trade flows.

Beijing has diverged from much of the world in continuing to pursue its goal of keeping Covid-19 cases at zero even as the highly transmissible Omicron variant spreads globally. Vietnam was also once a zero-Covid country, but it shifted strategy last year as mutations in the virus made it tougher to stop all transmission. In late December, the country’s trade ministry characterized China’s measures—such as suspending border-gate activities and stopping fruit imports—as overkill.

Local Chinese authorities have said the restrictions were prompted by Covid-19 infections on their side of the border or concerns about the virus hitching a ride into China via Vietnamese cargo. Foreign Ministry spokesman Wang Wenbin said on Jan. 4, when asked about the border disruptions, that “China adopts necessary Covid-19 protocols in light of the global Covid-19 situation with a responsible attitude toward the life and health of Chinese and foreign citizens.”

Some points on the border have since reopened, though the weekslong backlog will take time to clear, traders and truck drivers say. They are using truck-side campfires to stay warm and cooking basic meals of pork and boiled cabbage or bok choy as their wait continues. In some cases, authorities in Vietnam have barred new trucks from approaching until the pileup eases.

And there is no guarantee China won’t clamp down again.

Chinese cities, provinces and sea ports test not just people but also fruit for the coronavirus. A city in the Guangxi area banned dragon-fruit imports last month after the pathogen was detected on three batches of the fruit and its packaging, authorities there said. A county in Anhui province suspended all business related to imported fruit after two batches of Vietnamese dragon fruit were found similarly tainted, it said. Screening of Thailand’s shipments of longan—a fleshy lychee-like fruit—led to the quarantining of sellers, buyers and store visitors earlier this month.

If any country understands Chinese-style zero-Covid, it’s Vietnam. Until September, it was one of the world’s strictest practitioners of the approach, using test-trace-quarantine to beat back all incursions of the virus. Then the dynamic changed: Business closures hurt its economy, the Delta variant—then the most-transmissible strain—made it harder to catch every case, and the country’s vaccination rate, among the lowest in Southeast Asia until summer, started to climb. Vietnam’s leaders called an end to the country’s zero-Covid phase.

Now, despite Covid-19 cases remaining high, no major cities are in lockdown. In Ho Chi Minh City, where a strict lockdown last September prevented locals from so much as stepping out of their homes to buy groceries, schools are reopening and karaoke bars are in full swing.

But farmers of tropical fruit are hurting. Tran Kim Thuc, the director of a cooperative of 17 dragon-fruit farmers, said that with the border with China congested, merchants had stopped buying in recent weeks. Farmers were offloading the fruit to domestic buyers for as little as 10 cents a kilogram, he said. A kilogram is 2.2 pounds.

Farmer Tran Minh Son, 48 years old, said he was leaving fruit to rot, or using it to feed fish, or turning it into compost. “I’m so fed up.”

 

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