China has now placed hundreds of millions of its citizens under quarantine, leaving its economy grinding to a halt.
Workers can’t leave their homes. Factories are idle. Most (if not all) of China’s ports are no longer shipping. International flights are increasingly banned from the country…
…as The Telegraph’s Ambrose Evans Pritchard points out, “the longer Beijing enforces curbs on work and travel, the greater the global economic shock.”
…China makes the vast majority of our prescription pharmaceuticals.
I was wondering about this only yesterday. What started as a medical crisis looks set to now become an economic crisis.
As the Chinese economy shuts down, shortages will start to appear, and prices will start to rise. At the same time, with global trade to and from China slowing, the global economy will slump.
About 80% of world goods trade by volume is carried by sea and China is home to seven of the world’s 10 busiest container ports, according to the United Nations Conference on Trade and Development. Nearby Singapore and South Korea each have a mega port too.
“A closure of the world’s manufacturing hub impacts container shipping at large, as it is a vital facilitator of the intra-Asian and global supply chains,” said Peter Sand, chief shipping analyst at BIMCO, an international shipping association. “This will affect many industries and limit demand for containerized goods transport,” Sand told CNN Business.
“Am informed from my industry network in Asia about 2/3 of Chinese industrial supply chains to Japan already shut down, almost complete shutdown to So.Korea. Impact on Taiwan, Germany, other big manufacturing exporters must also be severe.”
The Chinese response to the coronavirus epidemic may be triggering a global economic slump. Was their response really necessary? According to one doctor with clinical experience of it:
Based on my clinical observations, this disease is highly contagious, but the mortality rate is low. Those that progressed into the life-threatening stage often occurred in the elderly already with chronic diseases.
Might it not have been better to let the epidemic run its course, while keeping the economy working – as usually happens with flu epidemics? As it is, it doesn’t look like the Chinese have managed to contain the epidemic anyway: more and more cities are being locked down. How long can that go on?