Economic fallout from China's coronavirus mounts across the globe

https://www.nationthailand.com/business/30382112

The economic casualties from China's coronavirus epidemic are mounting as Asian and European auto plants run short of parts, free-spending Chinese tourists stay home and American companies brace for unpredictable turbulence.

That's just the start of a financial hangover that is expected to linger for months even if the flulike illness is soon brought under control, economists and supply chain experts say. The Chinese epidemic's aftereffects will likely cause the global economy to shrink this quarter for the first time since the depths of the 2009 financial crisis, according to Capital Economics in London.

Chinese factories had been scheduled to reopen on Feb. 10 after a Lunar New Year holiday that already had been extended for several days because of the medical scare. But with many workers unable or unwilling to return to employers located in a sprawling quarantine region, the resumption of routine operations in many workplaces has been delayed.

Caterpillar this week said most of its Chinese suppliers had returned to work. But Foxconn, a major electronics producer for Apple, said it will be the end of the month before even half of its facilities are operating.

The country's links to the outside world, meanwhile, remain frayed. Both United Airlines and American Airlines said this week they would not resume normal service to mainland China until April 24, almost a month later than planned.

The ripple effects of China's shutdown are spreading, with the auto industry especially hard hit. Nissan temporarily closed one of its factories in Japan after running short of Chinese components, one week after Hyundai in South Korea did the same. Fiat Chrysler warned that it may shutter one of its European plants. Some U.S. manufacturers could face parts shortages in one to two weeks.

"I worry that it's going to be a bigger deal than most economists are treating it as right now," said Mohamed El-Erian, chief economic adviser at Allianz, the German financial services company. "It will take time to restart all these economic engines."



Chinese authorities on Thursday revised their count of coronavirus cases in Hubei province, the center of the epidemic, by nearly 15,000, after including patients diagnosed by doctors as well as by laboratory testing. The revision also increased the number of deaths by 242.

Since the virus first appeared in Wuhan in December, 59,804 cases have been identified, with 1,367 deaths reported. In the United States, the Centers for Disease Control and Prevention reported the 15th coronavirus case, an individual who had been in quarantine in Texas since arriving on a State Department-chartered aircraft from Wuhan on Feb. 7. And Japan reported the second death outside of China and said 44 more people tested positive for the illness aboard the quarantined cruise liner Diamond Princess, bringing to 218 the number of shipborne infections.

The coronavirus struck China as many U.S. corporations already were reconsidering their global footprint. President Donald Trump's tariffs on roughly 70 percent of all Chinese goods, imposed during a two-year long trade war with China, raised doubts about the future of trans-Pacific supply lines.

"We were already hitting the pause button on globalization," El-Erian said. "This [virus] disrupts the movement of goods and it disrupts the movement of people, making companies reassess how international they want their supply chains to be."

After initially dismissing the epidemic as principally a Chinese problem, U.S. policymakers in recent days acknowledged it will damage the global and U.S. growth outlook. Federal Reserve Board Chair Jerome Powell said earlier this week that there will "very likely be some effects on the United States" from the epidemic, which has closed thousands of Chinese factories that supply American companies.

Among the first tangible impacts in the U.S. is a decline in the number of Chinese tourists. Visitors from China represent a lucrative market for American Airlines, hotels, luxury retailers and entertainment venues, with average spending of around $6,500 per person.

As of Feb. 7, the number of passengers flying between North America and China was 75 percent below last year's level and was shrinking by the day, according to Quandl, a financial data provider.

At Sino American Tours, a Manhattan travel agency that caters to Chinese-Americans, bookings have plunged by 20 to 30 percent, according to Charles Man, vice president for marketing.

"Of course, we're impacted," he said. "A lot of people canceled trips back to Beijing, Hong Kong, Guangzhou, Taiwan and Singapore."

Chinese officials, meanwhile, are growing increasingly concerned that their efforts to contain the virus are strangling the economy. President Xi Jinping this week instructed subordinates to avoid "overreactions" that interfered with China's development goals. Huang Qifan, an influential economic policymaker, has said the ongoing supply chain disruptions are more costly than the two-year U.S.-China trade war, according to Trivium, an economic research firm in Beijing.

Indeed, the battle to contain the epidemic brought much of the world's second-largest economy to a standstill. The Chinese provinces most affected by the coronavirus are home to 49,884 branches or subsidiaries of foreign corporations, including nearly 9,500 American operations, according to Dun & Bradstreet.

A Chinese quarantine applying to roughly 60 million people - more than the population of Spain - interrupted routine business operations for almost every member of the Fortune 1000 list of the world's biggest corporations, Dun & Bradstreet said.

The Chinese government's enforced halt to commerce was akin to an economic stroke, cutting off the flow of needed parts and materials to companies all over the world. And just as with a stroke, the effects will linger after production across China sputters to life.

"It's going to happen in phases," said Hitendra Chaturvedi, a former supply chain specialist for Microsoft. "It's going to take six to eight weeks before everything comes back on line."

Each major Chinese supplier to a global corporation itself relies upon a network of smaller companies to provide food, uniforms, sanitation and parts. Nike, for example, depends upon 110 Chinese factories, each with their own supplier webs.

"They'll be having their own problems," said Chaturvedi, who teaches at Arizona State University. "It's not like you hit the button and everything starts to work automatically."

Along with crimping production of current products, the coronavirus shutdown has interrupted research and development efforts and thus may also delay the introduction of next-generation models, he added. That could impact consumer electronics makers such as Apple, which relies on China for almost half of its 775 global supply facilities.

One of those companies, AT & S of Austria, cut its revenue forecast for the current fiscal year by nearly 7 percent after the virus disrupted production at its Shanghai and Chongqing facilities. The company produces printed circuit boards for Apple and Intel as well as European automakers.

In some parts of China, businesses must pass a local government inspection before resuming work. Since there are only so many inspectors, that creates a bottleneck. Some foreign executives are trying to speed things up by showing officials receipts proving they are major taxpayers, according to James McGregor, chairman of APCO Worldwide's greater China region.

Many office workers face long lines to have their temperatures checked before they can enter their buildings. Once inside, some have objected to running central heating systems, preferring space heaters to the alleged dangers of recirculated air, McGregor said.

ASE Technology, a Taiwanese semiconductor maker, is struggling with a shortfall of returning workers and uncertainties about which of its suppliers are fully operational.

"This virus is a negative lottery and everyone is doing whatever they cannot to win," Ken Hsiang, the company's head of investor relations said on a Feb. 7 conference call. "So, the fear that is gripping the world, the overabundance of caution at a personal, company, and sovereign government levels are completely understandable. The impacts to our business are totally unpredictable."

China's $14 trillion economy now is a patchwork affair. In some areas, local officials are prodding employers to return to work. Elsewhere, officials remain preoccupied with the risk of contagion. The share of businesses that are operating normally ranges from about 26 percent in central Sichuan province to nearly 70 percent in Shanghai, according to Trivium.

Many employees remain reluctant to return to jobs in crowded factories, where an isolated cough might idle an assembly line. Those who want to return often face transport headaches as some public services have yet to return to full operations.

"Everything was supposed to be back to normal by now," said Craig Allen, president of the U.S.-China Business Council. "It's not going to happen for a while. I think that's starting to sink in."

The coronavirus is expected to dent global growth by depressing business and consumer confidence as well as temporarily severing supply chains, economists said. "Where the trade war ended, the coronavirus has picked up," said Nathan Sheets, chief economist for PGIM Fixed Income. "It suggests a whole additional class of risks they need to worry about as they rely on Chinese suppliers. It's another powerful shock toward global de-integration."

Lasting impacts on global trade also may emerge from the ocean freight market. Shipping rates on some routes out of China are down by one-quarter, despite new international regulations that took effect Jan. 1 requiring the use of cleaner but more costly fuel, said Patrik Berglund, chief executive of Xeneta, an online shipping platform based in Oslo.

Major retailers and manufacturers will soon be negotiating long-term shipping contracts amid an unpredictable market. They might benefit in the short run from lower prices. But if artificially depressed rates are locked in for an entire year, one or more shipping lines could tumble into bankruptcy and further unsettle global trade, he said.

"If there's limited cargo coming out of all of Asia, depending upon how this develops, we might see shipping lines really struggling to pull through," Berglund said.

Wall Street has taken the crisis in stride with the Dow Jones industrial average still up about 3 percent so far this year. But the financial markets' calm could be tested as additional data becomes available, said Gregory Daco, chief U.S. economist for Oxford Economics.

Negative readings on consumer or business confidence could send investors flooding into U.S. government bonds, pushing up the value of the dollar and leading to tighter financial conditions.

"We've been lucky to see no financial market ramifications," he said. "That's where a big part of the risk lies."

^^^^
Let’s hope China learned a valuable lesson about withholding information behind a curtain of secrecy. This could have been largely avoided or mitigated had they been honest with the global community back in DECEMBER. They’ve shot themselves in the foot, and the world along with it on a number of levels. Not the least of which is an out of control spread of a virus.

It's definitely starting to impact our business and travels. Primarily it involves equipment sourcing in various areas of the business, as we are coming across suppliers we typically use as approved suppliers being out of stock and in some cases unknown stock dates. These are common items, such as for an IT project we are doing - the access points that are typically well stocked at these suppliers. This is forcing us to go to suppliers we have not used and get approval for purchase to keep projects moving - and in some cases pushing costs up as we lose discounts from our approved suppliers.

The second area its impacted us is travel - we have some staff who I wouldn't have expected to be paying attention to come to me with concerns for travel even here in CONUS. Our largest client is a very large company internationally and they have issued an advisory to all partners that partner staff cannot go to any of their locations if personnel pass through affected areas. The issue is what do they mean affected - it was not spelled out so we are left to ask for clear direction or assumptions. We are going with the assumption its in areas there are known cases or airports that cases passed through that we at least know like LAX, ORD etc. We are right now, today asking one member of our staff who is passing through LAX today to self quarantine for 14 days and work from home during this period. Hate to do this but it simply comes down to it never happens to anyone till it does - and someone can be the next +1 count, and HR and legal have stamped it to proceed

//14 days? We are aware of the up to 24 days incubation - watched a video of a doctor explaining this and we believe it is an outlier as he stated and will proceed with 14 for now - subject to change

Xi Protege Now In Charge Of Hubei Province Imposes Draconian Lockdown On Wuhan

Summary:

China says 1,716 medical workers have been infected

WHO demands to know more about sick doctors, insists group of 12 virus experts will reach Beijing over the weekend

Singapore reports largest daily jump in cases amid increased human-to-human transmission

Egypt confirms first case; virus now present in 29 countries/territories

Hong Kong reports 3 new cases

New quarantine measures take effect in Wuhan

President Xi touts new "biosecurity law"

Hong Kong Disney land offers space for quarantine

Chinese company says blood plasma of recovered patients useful in combating the virus

US mulling new travel restrictions

Japan reports 4 new cases; one patient recently returned from Hawaii.

CDC Director: Virus is "Coming" to the US.

* * *

Update (1330ET): As we mentioned earlier during our introduction to Ying Yong, the President Xi protege and former Shanghai mayor who is now running Hubei Province for the Communist Party, the new seven more draconian quarantine measures that he's imposing on Wuhan are taking effect.

* * *

Update (1040ET): The WHO has just wrapped up its now-daily presser for Friday, and it appeared to focus on imminent plans to send a group of a dozen scientists and researchers to Beijing to figure out exactly what the hell is going on.

Much fuss has been made over the past week over China's continued refusals to allow Americans, or any other foreigners, for that matter, to offer assistance with the virus response. It's almost as if they're... hiding something...

Even after yesterday's big reveal about the change in their 'pro forma accounting standards' to reflect a higher death toll and number of confirmed cases (the jump alarmed global investors and prompted a selloff on equity markets), China still won't let Americans participate in a WHO-sponsored team of 12 researchers who are traveling to the mainland.

https://www.zerohedge.com/s3/f...S.jpeg?itok=n3D5GAZB

TIWIMON, the company my wife works for had an employee scheduled to return to work this week after returning from visiting the Philippines. The employee was told to stay home for 2 weeks, with pay.

quote:

Originally posted by BOATTRASH1:
TIWIMON, the company my wife works for had an employee scheduled to return to work this week after returning from visiting the Philippines. The employee was told to stay home for 2 weeks, with pay.

Hey BOATTRASH1, thanks for the post, seeing this helps to confirm we are not alone.

Don’t know what happened to previous message

Ok, first message didn’t show at all, second one didn’t show the text of the first one I repeated...
Strange, certainly shouldn’t have been against any rules...

Yes, I know that...

You doing ok there Boattrash? You don't smell bunt toast, do you?

quote:

Originally posted by Ryanp225:
You doing ok there Boattrash? You don't smell bunt toast, do you?

1. I’m fine, thanks for asking.
2. I have no idea WTH you are talking about nor what “bunt” toast is.
3. Not going to respond to any more posts that don’t pertain to the subject of this thread.

Vietnam Quarantines 10,000 Villagers for Coronavirus

https://www.breitbart.com/nati...llagers-coronavirus/



The first mass quarantine outside of China for the Wuhan coronavirus was reported in Vietnam on Thursday, with over 10,000 people living in farming communities near Hanoi locked down for 20 days after six virus infections were discovered.

AFP reported on Thursday that six villages in the Son Loi farming region, covering 2,500 acres about 25 miles from Hanoi, have been quarantined and surrounded by security checkpoints:

Health officials wearing protective suits sprayed disinfectant on vehicles. Police warned people wanting to enter the quarantined area that while they would be allowed in, they would not be able to leave.

The order comes after the health ministry reported that five people have been infected with the virus. It later announced a sixth case.

They all originated from a female worker who was sent to Wuhan in central China — where the virus originated — for training.

The disease then spread to her family and her neighbors, including a three-month-old baby.So far, only the female worker has fully recovered and been discharged from the hospital, according to updates from the ministry, while the others remain in a “stable” condition.

The disease was reportedly spread by celebrations of the Lunar New Year, a holiday known as Tet in Vietnam. Villagers said they have been told to avoid large gatherings for the duration of the crisis. Residents of the area said they are having trouble getting work in the vital construction industry because clients are suddenly reluctant to hire anyone from Son Loi.

Vietnam has reported a total of 16 coronavirus infections to date. Although the Vietnamese government banned air travel to China, the land border has proven difficult to lock down.

Vietnam rejected docking requests from two cruise ships this week due to coronavirus concerns. A local official explained that forbidding cruise passengers to disembark was “just a temporary solution to prevent the intrusion of diseases.”

The captain of one ship, the Norwegian Jade, shot back that Vietnamese port officials have been “unreasonable during this process” and refused to allow his ship to dock despite having no signs of illness aboard and no passengers who had visited China recently.

The Norwegian Jade ultimately headed for Thailand, which is believed to have given it permission to dock at the port of Laem Chabang.

Reuters noted that Vietnam is planning to quarantine hundreds of its own citizens at military camps and temporary facilities along the border as they return from China.

quote:

The first mass quarantine outside of China for the Wuhan coronavirus was reported in Vietnam on Thursday, with over 10,000 people living in farming communities near Hanoi locked down for 20 days after six virus infections were discovered.

Oh my, if they are quarantined in close quarters, like that cruise ship, this thing will rip through all of them. These "mass quarantines" seem like a good way to spread it to a lot of people.

quote:

Originally posted by chellim1:

quote:

The first mass quarantine outside of China for the Wuhan coronavirus was reported in Vietnam on Thursday, with over 10,000 people living in farming communities near Hanoi locked down for 20 days after six virus infections were discovered.

Oh my, if they are quarantined in close quarters, like that cruise ship, this thing will rip through all of them. These "mass quarantines" seem like a good way to spread it to a lot of people.

Unfortunately, I cannot imagine another way to make sure that the outbreak is contained. These countries just don’t have the resources to isolate individual cases or test everyone with potential exposure. Here in the US, I like to think we would be responsible enough to stay home until the illness was cured or at least avoid places that crowds frequent but humans are humans. I know I’d stay home but that’s if I was SURE I, or a family member had it. It’s a tough call.

quote:

Originally posted by Ryanp225:
You doing ok there Boattrash? You don't smell bunt toast, do you?

Ryanp225 Someone else explained the burnt toast reference to me. I apologize for firing back at you....

quote:

Originally posted by BOATTRASH1:

quote:

Originally posted by Ryanp225:
You doing ok there Boattrash? You don't smell bunt toast, do you?

Ryanp225 Someone else explained the burnt toast reference to me. I apologize for firing back at you....

How ‘bout ‘splaining the burnt toast reference to rest of us not “in the know”?

quote:

Originally posted by slosig:

quote:

Originally posted by BOATTRASH1:

quote:

Originally posted by Ryanp225:
You doing ok there Boattrash? You don't smell bunt toast, do you?

Ryanp225 Someone else explained the burnt toast reference to me. I apologize for firing back at you....

How ‘bout ‘splaining the burnt toast reference to rest of us not “in the know”?

I believe it is a reference to someone stroking out, obviously in jest here from the usual jokers

This is from last week:

quote:

Military preparing quarantine centers for coronavirus patients in US, Pentagon says

The new quarantine centers are:
JB Pearl Harbor-Hickam, Hawaii (HNL)
Great Lakes Training Center Navy Base, Illinois (ORD)
Naval Air Station Joint Reserve Base, Texas (DFW)
March ARB, California (LAX)
Travis AFB, California (SFO)

Dobbins ARB, Georgia (ATL)
Fort Hamilton, New York (JFK)
Naval Base Kitsap, Washington (SEA)
Joint Base Anacostia, Washington DC (IAD)
Joint Base McGuire-Dix-Lakehurst, New Jersey (EWR)
Fort Custer Training Center, Michigan (DTW)

https://www.miamiherald.com/ne...rticle240078853.html