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People in protective masks walk under decorations for Lunar New Year celebrations in Beijing on Jan. 25. (Photo: Bloomberg)

Fractured: China prepares for a broken economy

People in protective masks walk under decorations for Lunar New Year celebrations in Beijing on Jan. 25. (Photo: Bloomberg)

The expectation among analysts is that the rampaging coronavirus will definitely affect travel, consumption and manufacturing around the world.

Disinfection workers in protective gear sterilise the area against the novel coronavirus in Tong-in Market placed in the center of Seoul on February 072020 in South Korea.

In the medium-term its effect will be seen on economic growth within China and also its partners whose production processes and output has been affected by the two month derailment which is threatening to enter a third and fourth month as the year progresses.

Dan Weiland, writing for the Financial Times, outlined that “China’s leaders are bracing for a blow to first-quarter economic growth as the deadly coronavirus weighs on consumption, travel and manufacturing, with the lunar New Year break extended until next week.”

 The outbreak of coronavirus started in the province of Wuhan. Up to the current time, numbers infected are nearing 40,000 with over 1,000 reported as dead.

The countries and territories imposing China travel bans due to the new coronavirus.

Some sources are indicating their disbelief at the numbers, spreading fears that the impact is much worse than is being shared by the Chinese government.

In several provinces, factories have been ordered closed while millions of migrant workers in the country remain idle.

The New York Times reported on February 11 that workers remain stuck in their hometowns.

People wearing masks walk at Hong Kong Station at Central district of Hong Kong, China, on Wednesday, January 29, 2020.

It is noted that Chinese officials are asking for detailed health plans before factories or offices can reopen.

Meanwhile, assembly lines that make General Motors cars and Apple iPhones are closed to workers as well.

New York Time analysts comment that as the middle of February approaches, it was expected that much of the country was supposed to have reopened by now.

Some factories which manufacture the Apple iPhone in China have been closed.

Instead, there are empty streets and closed businesses, suggesting “that weeks or months could pass before this vital motor of global growth is humming again.”

Containment efforts have separated workers from their jobs and factories from their raw materials.

Analyts and reporters with the New York Times note that the slowdown is now being reflected in reduced shipping and “lead to forecasts of a sharp fall in production of everything from cars to smartphones.”

Effects of China’s quarantine are being felt in industries across the globe.

The problem, as it stands, is that both the death rate and infection rate are not slowing down. Analysts believe the worst is yet to come.

Meanwhile, the global effects of the Chinese country-wide quarantine are being felt.

On Monday, Nissan of Japan said it would shut down its plant in Kyushu, Japan.  Other carmakers, like FCA in Italy and Hyundai in South Korea, are already complaining of lack of parts.

Two passengers wearing masks arrive at Beijing International Airport on January 20, 2020, ahead of the Lunar New Year.

The China Development Forum for business leaders and economists has postponed its annual meeting indefinitely.

For China, while investors would love an indication of the game plan for containing the virus, and with this an estimate of recovery times, the end is nowhere in sight.

In major manufacturing hubs like Shanghai, Shenzhen, Suzhou and Nanjing, the government is demanding that workers give details of travel history, take frequent temperature checks, and that companies prepare for scrutiny by health officials.

Many migrant workers, who consist of two-thirds of the workforce, are not prepared to make the journey back to work until they believe the virus is under control.

That time has not come. It is estimated by analysts that the medium term result of the dislocation will be a slippage in growth rates for China of more than one per cent in 2020.

–Avia Ustanny