China’s Empty Streets Do Not Ship Product

Returning to China in mid-February, I had seemingly stepped into a parallel universe. Much of Beijing looked, and even smelled, like the familiar metropolis in which I’ve lived for decades. Except for one thing.

Where were all the people? … I felt as if I’d stumbled onto the set of a post-apocalyptic film. __

Work disruptions across China are persisting far beyond expectations, making it far more difficult for the communist party to pretend that all is well.

Whatever the goods, the disruption in supply will last longer than most analysts think. Giant container ships are skipping Chinese ports or are leaving only 10 percent full. At the port of Long Beach, Bass tells me, container traffic is down about 40 percent. That’s the result of closed Chinese factories. __ NI

Chinese factories were scheduled to reopen February 9, 10 days after the end of the Lunar New Year holiday. Yet as Simina Mistreanu, who writes for Forbes on the Chinese manufacturing sector, notes, many plants remain closed.

She cites the situation around Chengdu, where authorities require factories to provide two masks daily for each worker. In order to start production, a plant must show it has a two-week inventory of masks. Masks are unavailable, so in one cluster outside the city only five of about 50 companies have gone back to work.

… Warehouses are shut, making shipments extremely difficult. Moreover, as Bass points out, containers are now left sitting on the dock at the Tianjin and Ningbo ports for extended periods. Containers bound for the U.S. are being loaded as much as four weeks late.

Some believe shortages will become noticeable at American retailers in mid-April, but the big-box stores are especially vulnerable because they generally keep inventories to a minimum. So Walmart shelves, a friend tells me, might show empty spots next month. __

With Walmart shelves emptying, Amazon will have a prime opportunity to display its ability to quickly locate supply lines almost anywhere in the world.

Patient care has suffered from overtaxed medical staff, heartless forced quarantines, and shortages of beds, equipment, and diagnostic testing kits. Ailing Chinese were manhandled into strict isolation and then left untended. People suffering from unidentified or non-coronavirus complaints—from HIV/AIDS complications to cancer to injuries from exploding fireworks—were thrown out of hospitals to make way for high-priority novel coronavirus cases.

Such descriptions evoke wartime scenes from a combat triage tent—and that may be no accident. Girding to fight the “demon virus,” Xi himself has likened the anti-epidemic battle to a “people’s war.” The question is what happens if many people no longer believe him and begin to seek private survival strategies. For some, that might mean long delays before resuming work; if pervasive and prolonged, this could deal a body blow to China’s already slowing economy. Worse, others may try to evade their quarantines. The potential for even greater public health catastrophes is sobering.

… It comes as little surprise that more and more Chinese seem skeptical about official Chinese epidemic statistics. Foreign critics have been raising eyebrows over Beijing’s funny numbers for decades. Worse, recently Beijing flip-flopped on which criteria to use to determine “confirmed” infections; at one point, case definitions flipped and then flopped back, all in about a week. __ Source

If people around the world are skeptical about communist party statistics from China, they may have good reason:

In recent days, official data has shown new infections leveling off. For example, on Feb. 25, the National Health Commission reported only a total of nine new diagnosed cases outside of Hubei province, where the outbreak is most severe.

In fact, Shandong alone had new infections in the double-digits daily. On Feb. 20, new infections spiked, with 274 people testing positive.

… U.S.-based China commentator Tang Jingyuan told The Epoch Times that authorities reporting fewer infections is likely a tactic to convince Chinese citizens that the spread of the virus was contained and thus, it would be safe to return to work. __ Source

If citizens think that government statistics are being faked to get them back to work, it may take even longer to return to a normal state of affairs in China. But will China-based globalism survive the great train wreck?

… “If Mr. Xi’s world is to end, it will not be with a bang or a whimper,” the former British diplomat Parton wrote. “But it might be with a broken economy.”

… The government’s own quarantine protocols are another reason China, the “factory to the world,” has yet to reopen for business. Beijing already extended the Lunar New Year holidays due to the epidemic, so many workers have just started returning home to Beijing. On Feb. 15, Beijing announced its 14-day self-quarantine for returnees—meaning all who came back after Feb. 15 would still be sequestered at home now.

… Linda works in the beauty and cosmetics business, and she said none of her colleagues have returned to work. “They’re either in quarantine in Beijing or under lockdown in the provinces.” The shop where she works eats up more than 100,000 RMB ($14,285) in monthly rent, yet the glass-walled space sits silent and empty. With three locations in Beijing, her boss will likely shut down one of the three, she said with startling calm, “maybe by the end of February or early March.” When might the virus scare subside? Shrugging, Linda said, “Who knows? My brother works with tour groups going to South Korea, and he plans to reopen March 1.”

If you reopen stores, will customers come? The glittering Taikoo Li mall in Sanlitun district is normally teeming on weekends. Walking through the vast complex on Feb. 20, I didn’t see more than two dozen shoppers. Virtually overnight, temporary fencelike barriers had appeared in front of the vast Apple Store, funneling visitors toward an opening where a black-clad temperature-taker with “security” emblazoned on the back of his jacket stood guard. Apple had just announced that it would miss revenue goals in the current quarter because of a “slower return to normal conditions” than it had anticipated in China, which is not only a big iPhone market but also whee most Apple products are assembled. Analysts warned revenues could be $10 billion below the $65.3 billion that had been previously expected.

… China’s economy has been slowing. It took a hit during the Sino-U.S. trade war, ever before the demon virus escaped from Wuhan. In 2003, China’s economy was growing annually in double digits; now it’s 6 percent and heading south. The systemic dysfunctions—and Hubei’s horrific triage scenes—have rattled grassroots confidence that Beijing can keep its side of the Dengist bargain while using the same authoritarian tactics and even some of the same tools dating back to Mao’s time. __

The novel coronavirus outbreak is proving to be a test for China-based globalism at the very least. As the virus spreads across Europe and western Asia, it is also proving to be a test for public health services around the world. What happens in Africa as coronavirus moves through is likely to remain something of a mystery for a while.

One sector of global economies that may prosper most, is online services.

Some recommendations on how to prepare for being shut-in for four weeks

More on China’s struggle with telling the truth:

These recent case counts are flatly impossible. China can massage the data, but it can’t massage the virus. The use of faked data to encourage businesses to open and people to travel will only result in yet another wave of illness — and another wave of closures.

These closures are costing the Chinese economy dearly. Manufacturing, construction, and transportation together account for roughly 45 percent of China’s GDP. A one-third dip in activity in these three sectors for one month would cost China roughly 1.25 percent of annual GDP. A more realistic two-thirds dip for one month followed by a one-third dip in the second month would cost China 3.75 percent of GDP, or more than its entire (true) growth in 2019. And that’s not even allowing for a dip in services due to February’s closures. __

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4 Responses to China’s Empty Streets Do Not Ship Product

  1. Will Brown says:

    My own contribution to the much-deserved piling on about the CORVD-19 coronavirus can be read here:

  2. bob sykes says:

    Forget Apple. We import over 70% of the drugs we use, including staples like penicillin. A year ago, during the run up to the trade war, while many people noted how much China would suffer, I noted that Apple and Walmart would have no products to sell, and that they would go bankrupt.

    What the US desperately needs is a protectionist, mercantilist trade policy that forces American manufacturers to relocate their factories back to the US. Prices would go up, but the opioid crisis would go away, and sick people would have the drugs they need.

    Zero immigration is part of that deal, too.

  3. Gavin Longmuir says:

    China’s exports are someone else’s imports. And all us “someone elses” are going to find out how much our economies depend on China as the “Workshop of the World”. The economic harm is not going to be limited to China. This may be enough to bring about the long-expected stock market reversion-to-the-mean, which may trigger a US recession at just the right time to ensure that President Trump loses the election and is replaced with a normal kind of politician — the ones that China’s rulers know how to manipulate.

    From the perspective of the Chinese Communist Party, this dark cloud could have a bright silver lining.

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