Virus slows China’s economy
Sharp fall in smartphone, car production forecast as outbreak continues
KEITH BRADSHER
Workers are stuck in their hometowns. Officials want detailed health plans before factories or offices can reopen. Assembly lines that make General Motors cars and Apple iPhones are standing silent.
More than two weeks after China locked down a major city to stop a dangerous viral outbreak, one of the world’s largest economies remains largely idle. Much of the country was supposed to have reopened by now, but its empty streets, quiet factories and legions of inactive workers suggest that weeks or months could pass before this vital motor of global growth is humming again.
The global economy could suffer the longer China stays in low gear. It has been hampered by both the outbreak and its own containment efforts, a process that has cut off workers from their jobs and factories from their raw materials. The result is a slowdown that is already slashing traffic along the world’s shipping lines and leading to forecasts of a sharp fall in production of everything from cars to smartphones.
“It’s like Europe in medieval times,” said Joerg Wuttke, president of the European Chamber of Commerce in China, “where each city has its checks and cross-checks.”
New figures show authorities still have a long way to go before the outbreak can be tamed. On Monday, authorities reported the most deaths from the new coronavirus in a single day, raising the death toll by 97 to 908.
In a sign that China’s leaders feel increasing pressure to look like they are in control, Xi Jinping, the country’s top leader, toured a Beijing neighbourhood and hospital, in what state media described as an inspection of the front line of the outbreak. Chinese officials have been roundly criticized online even in the face of tough censorship for what many see as a slow initial response and the suppression of early warnings. On Monday, a team from the World Health Organization landed in Beijing to work with Chinese researchers battling the coronavirus. Their arrival could signal a shift in attitude among China’s leaders, who had balked at a visit and have long worked to show that they do not need foreign assistance to tackle problems.
The organization’s director general, Tedros Adhanom Ghebreyesus, cited with concern instances of infections among people who had not travelled to China, suggesting that even more cases could emerge. “In short, we may only be seeing the tip of the iceberg,” he wrote on Twitter.
Chinese health officials have been encouraged that the pace of recoveries among victims has outpaced deaths for more than a week. The rate of infection, however, has continued to soar, suggesting that the worst is still to come.
It is becoming increasingly clear that restarting China — the world’s largest manufacturer and a titan of global trade — would be difficult even if the country makes major strides in the next few days toward containing the outbreak.
Until then, the damage is spreading.
On Monday, Nissan of Japan said it would shut down its plant in Kyushu, Japan, for four days beginning later this week “due to supply shortages of parts from China.” Other carmakers like FCA in Italy and Hyundai in South Korea have already warned that a lack of parts from China could force them to curtail production in their home markets.
The China Development Forum, the country’s premier gathering of business leaders and economists, said its annual meeting, set for next month, had been postponed indefinitely.
Government officials had extended China’s official Lunar New Year holiday by three days to Feb. 3 to keep people home. Major business hubs, like the cities of Beijing and Shanghai and the provinces of Guangdong and Shandong, then further extended holidays until Monday.
As the day dawned, it was clear that business as usual had not resumed. Traffic in Beijing was much lighter than normal, stores remained closed and many residents worked from home or did not work at all.
Daimler, the German maker of Mercedes cars, said it began gradually ramping up production at its Chinese factories Monday. But other major companies said their factories remained closed or were running slower than usual. Ford Motor said that its joint venture with one of China’s biggest stateowned firms was restarting some production but that it would “ramp up our production over the following weeks.”
General Motors said that it would reopen the first of its huge assembly plants in China only Saturday and would gradually reopen the rest over the following two weeks, “based on local employees’ safety readiness, supply chain readiness and product inventory needs.”
China’s containment efforts are contributing to the disruptions.
Authorities have locked down a region of central China around Wuhan, the city at the centre of the outbreak. Local authorities are taking a tough stance with traffic, meaning workers are struggling to return to their jobs. Many towns and cities have begun imposing two-week mandatory quarantines on arriving truck drivers who picked up cargos in cities with disease outbreaks or even just drove through these areas.