G20 Could Disrupt Yangtze River Delta Operations

By Pianpian Huang and Owen Haacke

As the Group of 20 (G20) Summit—the annual, large-scale global government conference—heads for Hangzhou, China in September, companies with operations in the Yangtze River Delta (YRD) region are planning for expected disruptions to production and logistics.

What is expected?

Whenever a large, multilateral event convenes in China, local governments adopt temporary measures—such as road and factory closures that can hinder company operations— to reduce traffic and emissions and ensure the event’s success. Though no measures have been officially confirmed for the G20, during previous large-scale events, motor vehicles and hazardous chemical transportation vehicles were restricted from the city during specific times each day. Companies indicate regional governments will likely require manufacturing facilities with high emissions near the G20 venue to halt operations.

For example, factories in Huzhou, about 60 kilometers from Wuzhen, were closed for nine days during the December 2015 World Internet Conference in Wuzhen, Zhejiang province. The event featured senior Chinese government officials and senior executives from leading multinational corporations. In 2014, when Beijing hosted the Asia Pacific Economic Cooperation meeting, municipal governments released special measures to reduce emissions. Additionally, factory closures in six neighboring provinces and municipalities brought pristine air quality and blue skies—a phenomenon commentators dubbed “APEC Blue.” The government also closed roads for the three-day 2014 Shanghai Conference on Interaction and Confidence Building Measures in Asia.

As the G20 Summit approaches, companies with operations or supply chains in and around the YRD region are closely monitoring closure announcements.

Official Announcements

Hangzhou government officials have met behind closed doors to discuss environmental protection, transportation, and logistics in preparation for the G20, but have not publically announced specific factory closures.

Companies should be wary of unofficial reports regarding closures. For example, the media recently linked closings of factories in Shaoxing city—63 kilometers from Hangzhou—to the G20 preparation. However, USCBC confirmed with government agencies that these closures are a result of Shaoxing government directives on curtailing illegal printing and dyeing production and unrelated to the G20.

Looking Forward

To prepare for potential disruptions, companies should:

• Watch for official announcements   The Hangzhou government plays a key role in any logistical and operational adjustments for the G20. For updates, companies should refer to official Hangzhou government sources.
• Rely on local teams   While the G20 is a key conference this year, it is important that local teams of government affairs staff regularly communicate with government agencies for updates on all major conferences in the region. Staff in US headquarters can avoid misrepresentation of the situation by having local teams confirm media reports.

About the authors: Pianpian Huang and Owen Haacke are US-China Business Council business advisory service managers.