US on alert for supply chain disruptions caused by Omicron in China: Biden officials

WASHINGTON (BLOOMBERG) – The Biden administration is monitoring real-time data obtained from businesses operating in China to determine whether outbreaks of the Omicron variant of the coronavirus pose a risk to US supply chains, an administration official said.

It is too early to tell whether there will be any impact on the American economy from the variant’s spread in China or from aggressive efforts by officials there to stamp it out, the official said.

The official asked not to be identified discussing the administration’s efforts because the data is not public.

President Joe Biden and his team have been accused by political opponents of being caught flat-footed both by pandemic-related supply chain disruptions that have driven inflation to four-decade highs and by the arrival of the Omicron variant in the United States – where it has caused record numbers of cases and hospitalisations.

China, meanwhile, has pursued a Covid-19-zero strategy, in which it has locked down entire cities to stop outbreaks. The country reported 66 cases from local transmission on Wednesday (Jan 19), down from 163 on Jan 16, the most in one day during the Omicron surge.

China’s US embassy, asked to comment on the American initiative, cited remarks by President Xi Jinping earlier this month urging steps “to facilitate cross-border trade, keep industrial and supply chains secure and smooth, and promote steady and solid progress in global economic recovery”.

With regard to China’s pandemic-response steps, Foreign Ministry spokesman Zhao Lijian has described them as “sound epidemic prevention measures”.

US consumers and businesses have lapped up Chinese goods throughout the pandemic. By value, China was the biggest source of US imports in 2021, at US$456.8 billion (S$615.3 billion), or almost 18 per cent of the total.

US officials put in place an early-alert system during the rise of the Delta variant last year, which improved the federal government’s monitoring of global supply chain disruptions as they occurred around the globe, the administration official said.

Information is shared with companies in the supply chain to alert them of potential delays, the official said. The data collection begins with the US Embassy in Beijing and the State Department’s regional bureaus, which mine contacts around the country to gain a better view of the virus’ spread.

The White House has asked the State Department to put the system on high alert for Omicron disruptions, the official said. The department has increased the frequency at which it shares information with the White House to multiple times a week, the official said.

The data captures port and airfreight activity as well as information that private-sector companies provide to the government about their own facilities or suppliers in China. It informs forecasting systems used by White House economists to measure the impact on the US economy.

Outbreaks in China have caused some slowdowns in airfreight due to lengthened cleaning protocols, which impact how quickly a cargo plane can be turned around.