Tian­jin blasts will im­pact econ­omy for months

The China Post - - COMMENTARY -

With a swath of one of the world’s busiest ports in ru­ins, more than a bil­lion U.S. dol­lars in losses, and some ma­jor multi­na­tional firms still un­able to ac­cess their premises, the eco­nomic im­pact of the Tian­jin ex­plo­sions could re­ver­ber­ate for months.

Last week’s blasts trig­gered a gi­ant fire­ball and killed 114 peo­ple, spark­ing fears over toxic pol­lu­tants in the city’s air and wa­ter, though author­i­ties have in­sisted both are safe.

They also dev­as­tated a large area of the port of Tian­jin, a key gate­way to the world’s sec­ond­largest econ­omy and its big­gest trader in goods.

Among the most strik­ing im­ages of the dis­as­ter have been those show­ing count­less lines of im­ported cars burned to a crisp, with about 10,000 new ve­hi­cles near the blast site re­port­edly de­stroyed.

More than 150 com­pa­nies in the For­tune 500 — the U.S. mag­a­zine’s list­ing of the world’s big­gest firms — have oper­a­tions in the city, and its port is one of the 10 busiest glob­ally.

The city has a pop­u­la­tion of 15 mil­lion peo­ple, al­most twice that of Lon­don, and an econ­omy roughly the size of the Czech Re­pub­lic.

“Eco­nomic ac­tiv­ity in Tian­jin has yet to re­turn to nor­mal sev­eral days af­ter the dev­as­tat­ing ex­plo­sions there,” Cap­i­tal Eco­nom­ics, a re­search firm, said in a note to clients.

“While most of the port has re­mained in op­er­a­tion, dam­age to ware­hous­ing and fac­tory fa­cil­i­ties has been se­vere,” it added, warn­ing that “dis­rup­tion is likely to spread along sup­ply chains.”

Some of the world’s big­gest com­pa­nies have had their oper­a­tions in the area af­fected, in­clud­ing Ja­pan’s Toy­ota, the num­ber two global au­tomaker.

Pro­duc­tion at its plant in the area re­mained sus­pended Wed­nes­day. More than 50 out of 12,000 em­ploy­ees at the fac­tory, which pro­duces mod­els in­clud­ing the Corolla sedan, were in­jured.

“We are still as­sess­ing the sit­u­a­tion,” a Toy­ota spokesman said.

Phar­ma­ceu­ti­cal gi­ant Glax­oSmithK­line also has a plant in the area around the blast site, and a spokes­woman told AFP that it had been un­able to ac­cess it to as­sess the dam­age.

U. S. agri­cul­tural ma­chin­ery man­u­fac­turer John Deere said its fac­tory was dam­aged, Bloomberg News re­ported.

Euro­pean air­craft man­u­fac­tur- er Air­bus has a gi­ant assem­bly plant in the Tian­jin, its only such fa­cil­ity in Asia and cru­cial to one of its most im­por­tant mar­kets.

Its staff were safe, it said, but it has of­fered to move em­ploy­ees to down­town Tian­jin, away from the port area, and was analysing “the lo­gis­tics sit­u­a­tion.”

“We are try­ing to find tions,” a spokesman added.

Soft drinks gi­ant Coca- Cola and Ja­panese au­tomaker Honda both told AFP they were eval­u­at­ing the im­pact of the blasts on their oper­a­tions.

Ac­cord­ing to the Amer­i­can As­so­ci­a­tion of Port Author­i­ties’ 2013 world ports rank­ings, the most re­cent avail­able on its web­site, Tian­jin ranked third glob­ally for cargo vol­ume on 477 mil­lion tonnes, and 10th for con­tainer traf­fic, with nearly 13 mil­lion twenty foot equiv­a­lent units.

Tian­jin Port it­self says that oper­a­tions have re­turned to nor­mal “ex­cept for those at the site or sur­round­ing ar­eas” — which could cover a sig­nif­i­cant sec­tion of the fa­cil­i­ties. It did not re­spond to re­quests for de­tails from AFP.

Shares in Tian­jin Port De­vel­op­ment Hold­ings tum­bled more than 13 per­cent in Hong Kong on Mon­day — their big­gest loss since 2009, and were down 2.9

solu- per­cent to HK$1.36 on Wed­nes­day.

Losses in the auto sec­tor alone were es­ti­mated at US$310 mil­lion, ac­cord­ing to the Peo­ple’s Daily, the of­fi­cial mouth­piece of main­land China’s rul­ing Chi­nese Com­mu­nist Party, and the Fitch rat­ings agency has warned that in­sur­ance claims re­sult­ing from the ex­plo­sions could amount to US$1.5 bil­lion.

An­a­lysts say the long-term ef­fect will de­pend on how long port oper­a­tions are dis­rupted, with in­vest­ment bank No­mura say­ing in a note that while it did not ex­pect a “sig­nif­i­cant” im­pact on the econ­omy, “The key is­sue is whether this area will be af­fected per­ma­nently or tem­po­rar­ily.”

North­ern China faces “an im­me­di­ate in­ter­rup­tion in chem­i­cal and plas­tic sup­ply” for up to a month, re­search firm IHS said.

“The port is re­spon­si­ble for the area cov­er­ing Bei­jing and the sur­round­ing area, so it’s very im­por­tant,” said Tse Le­ung Yip, an as­so­ciate pro­fes­sor at the In­ter­na­tional Cen­tre for Mar­itime Stud­ies at Hong Kong’s Poly­tech­nic Univer­sity.

“Ships could berth nearby, but it’s not very con­ve­nient, es­pe­cially be­cause Bei­jing re­ally re­lies on Tian­jin’s port.”

Newspapers in English

Newspapers from Taiwan

© PressReader. All rights reserved.