CORONAVIRUS EPIDEMIC TESTS THE WORLD’S ECONOMIC VIGOR:
China’s coronavirus disease 2019 (Covid-19) continues to take human lives. The Chinese people have suffered the most in terms of total cases and lives lost. The epidemic began in Wuhan, capital of the Hubei province. As I write this column, Hubei has had 60,000 confirmed cases and almost 1,800 deaths.
Covid-19, however, has escaped China’s political borders. The World Health Organization’s Feb. 18 Covid-19 “Situation Report 29” declared that 25 countries have clinically diagnosed Covid-19 cases, and many are laboratory-confirmed. As of Feb. 17, WHO had sent virus laboratory testing kits to 34 countries. Eventually, 56 countries will receive them.
WHO’s Risk Assessment index rated the virus’ global health threat level as “High.”
Though it is no economy killer, Covid-19 does threaten the world’s economic vigor. That is not a surprise. The current trade war between the U.S. and China has only begun to decouple their economies.
China’s communist government must import natural resources (oil and minerals) to keep its industry humming. It also imports some foodstuffs that have domestic political impact. Since a swine virus devastated its pig farms, China relies on U.S. pork to appease the palates of its oppressed but increasingly restless citizens.
In the last three weeks, a spate of corporate and governmental announcements shows the U.S. and Chinese economies remain entwined.
For example, Apple warned investors that the coronavirus epidemic will prevent it from meeting first-quarter profit expectations. Domestic Chinese demand for Apple products has declined sharply. The epidemic has also disrupted iPhone production in China. Apple remains a blue chip company, but it faces demand and supply chain problems.
The epidemic has also disrupted the world’s largest mobile phone industry trade show, the Mobile World Congress. On Feb. 12, the MWC decided to cancel its annual Barcelona conference. Fear the disease may spread is one reason, but travel restrictions from East Asia would have reduced attendance.
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h/t GR