New COVID lockdowns in China have disrupted the world’s second-largest economy.

Why it matters: With Chinese commerce, shipping, transportation and manufacturing hobbled, global consumers could feel the effects in the form of continued supply chain issues and higher inflation.

Catch up quick: While the number of COVID cases has been falling globally, a new subtype of the Omicron variant has driven a dramatic spike in cases in China, where the country’s government has adopted a zero-COVID policy. 

• Roughly 200 million people in China, or 14% of the country’s population, are in a full or partial lockdown, Nomura’s Asia Economics team wrote in a note. 
• Shanghai, China’s financial capital and largest city with 25 million people, entered a complete lockdown earlier this week.

The impact: Tesla’s Gigafactory Shanghai has been shut down for at least two weeks.

• Suppliers to companies like Apple and Tesla have also had to shutter.

The big picture: Most warehouses in Shanghai have been closed, and more than 90% of trucking capacity in the city has been out of service. 

• Shippers rerouting air and ocean cargo have driven up freight prices and caused days of delays. 

What they’re saying: “[T]he geographical distribution of the latest wave remains extremely widespread, and the outbreak continues across almost every part of China of significant economic importance,” Nomura analysts write.

What to watch: A highly effective domestic vaccine would allow China to move away from this lockdown quarantine policy, Brendan Ahern, chief investment officer of KraneShares, tells Axios.