A Different Country Now
China’s financial situation in 2020 is less resilient than it was in 2003, when the country shrugged off the SARS epidemic. The SARS debacle left few long-lasting scars on China, mainly because China’s economy was red-hot and still growing fast.
Things are likely to be a bit different now:
Starbucks closed half of its more than 4,000 stores in China, Ikea closed all its 30 outlets in the country and McDonald’s shuttered several hundred in Hubei province, which includes Wuhan city.
Stock markets in New York, Tokyo and Hong Kong have yet to recover from losses sustained after news last week of China’s lockdown of Wuhan, the city of 11 million where the outbreak started.
“A broader spread of this disease has the potential to disrupt travel, trade and supply chains throughout Asia,” said Eswar Prasad, an economist at Cornell University and the former head of the International Monetary Fund’s China division. __ It Won’t Be a Quick Recovery
Chinese Feel Betrayed
The official death toll has risen above 200, Chinese cities are turning into ghost towns, businesses are closing or moving out of the country, and the people of China are feeling betrayed.
“They all knew,” a user on the Weibo microblogging platform said. “They just didn’t say, but lied to us.”
“If only they could have told people earlier, we could have taken better preventive measures, and the virus would not have spread this fast,” another wrote. __ ZH
There have even been reports of the government cremating bodies before they can be brought to a morgue and officially included with the statistics, helping to maintain the illusion that the mortality rate for the novel coronavirus outbreak is far below the rate for SARS at just 2%-3%. In reality, some have suggested the true mortality rate is closer to 11%, as thousands in dire need of treatment are confronted by shortages of supplies and doctors, even as Beijing sends legions of medical “personnel” (many of whom are likely just PLA soldiers) to Hubei.
Instead of embracing transparency, Beijing back in December arrested several researchers for “spreading false rumors” about the severity of the outbreak. Of course, their warnings have since been realized. __ They Lied to Us
How High is the Death Toll?
It seems that the communist party apparatus of China is playing with the statistics again. People who likely died of one thing are being categorised as having died from something else:
But the Wall Street Journal has already documented the fact that the death toll is being artificially suppressed. As I discussed the other day, many of those that have died are being categorized as dying from “severe pneumonia” so that they won’t count as coronavirus deaths. Meanwhile, it is becoming exceedingly clear that the number of confirmed cases is also much lower than it should be. Large numbers of victims are being classified as “suspected cases” even after it is quite obvious that they have the virus. __ Michael Snyder via ZH
Officially, more than 200 have died from novel coronavirus so far. But of course, no one inside or outside of China expects even an approximation of the truth from the many propaganda outlets of the party apparatchiks.
What is Coming?
Outside of Wuhan and its vicinity, the world has been given some time to prepare itself for potential spread of the novel coronavirus. Suspected cases will be tested, treated, and quickly isolated as necessary. With the epidemic out in the open now, necessary public health measures are likely to be taken wherever the virus appears to be seeking a foothold. This is northern hemisphere winter, when colds and flu abound. Awareness of this virulent, novel coronavirus should help to encourage people to be more faithful with their handwashing and other anti-contagion hygiene habits.
… fears of contagion are upending sales and operations for American corporate giants ranging from Apple, Google and Tesla to McDonald’s, Starbucks and Royal Caribbean. And despite efforts by the Trump administration to decouple the U.S. and Chinese economies through protectionist trade policies, the countries are ever more economically interconnected. __ CBS
China failed to confront the problem when it first came to the attention of medical personnel. By trying to cover up the viral epidemic, communist officials created an economic problem that will linger for some time.
Inside China, the virus has already caused massive disruption by dampening consumption during Lunar New Year celebrations — the busiest shopping time in the country — and forcing lockdowns of key supply chain nodes. Moreover, any dip in Chinese economic growth and outbound tourism will have ripple effects in countries that rely on trade with China. The existing global economic slowdown prior to the outbreak has already done a number on the likes of export-oriented economies worldwide, but the possibility of a drop in Chinese tourist numbers or a blow to Chinese economic growth could sap tourist revenue around the world, particularly in East and Southeast Asia.
… Already, the outbreak in China has disrupted the flow of travelers, as Beijing has banned Chinese tourists from conducting overseas group tours, which account for 44 percent of the country’s outbound tourism. A sustained outbreak could further stanch flows of Chinese travelers to South Korea and Japan, while the spread of the virus inside either country would naturally have a chilling effect on tourism overall.
… if the measures prove ineffective and the virus spreads further — or becomes more fatal — the long period of incubation and contagiousness could mean cases continue to crop up internationally for some time to come. In such a scenario, authorities in China and farther afield won’t be lifting restrictions anytime soon, which would herald a difficult year ahead for the global tourism industry. __ Stratfor
Stock markets have been volatile as news about the novel coronavirus emerged, and as travel quarantines inside and around China have tightened. This volatility is due to a number of factors, including tightly linked global supply chains, the “echo chambre” effect of social media, many currently overpriced stocks (including TSLA), and other factors.
Chinese stock markets have been closed since 24 January, and will only re-open again in three days, on 3 February, Monday next. We will see what happens then.
“The near-term economic impact appears substantial. In addition to disruptions to production, avoidance of face-to-face contact may have resulted in a sharp fall in service activity,” said economists at Standard Chartered in a Friday note. __ Marketwatch