In 2002, when a lethal, pneumonialike virus known as SARS emerged in China, the country’s factories were mostly churning out low-cost goods like T-shirts and sneakers for customers around the world.
China’s economic growth is expected to slip this year to 5.6 , percent down from 6.1 percent last year, according to a conservative forecast from Oxford Economics that is based on the effect of the virus so far. That would, in turn, reduce global economic growth for the year by 0.2 percent, to an annual rate of 2.3 percent — the slowest pace since the global financial crisis a decade ago.
The trade war waged by the Trump administration has prompted a partial decoupling of the United States and China, the two largest economies on earth. Multinational companies that have used factories in China to make their wares have sought to avoid American tariffs by shifting production to other countries — especially Vietnam. The coronavirus might accelerate that trend, at least for a time, should global companies find themselves locked out of China.
A frightening epidemic coinciding with a major holiday will almost certainly spell a substantial loss of sales for China’s tourism and hospitality industries. Hotels and restaurants that would normally be full of revelry are empty. Concerts and sporting events have been canceled. IMAX, the large screen film company based in Toronto, has postponed the release of five films it had intended to showcase in China during the holiday.
All of this could play havoc with businesses that depend on China for components, from auto factories in the American Midwest and Mexico to apparel plants in Bangladesh and Turkey. China had just joined the World Trade Organization, gaining access to markets around the globe. It was harnessing its seemingly limitless supply of low-wage workers to produce cheap consumer goods. Its economy centered on exports. Its consumer market remained in its infancy.
The US semiconductor industry is particularly entrenched in China, which is both a major manufacturing hub and a market for its products. Intel’s customers in China accounted for about $20 billion in revenue in 2019, or 28 percent of its total for the year.
nytimes Ooh. How will the Philippines pivot on this?