China is playing a hugely important economic role in the world. Thus, the effects of the crisis could be lasting and choppy. The infection had already hit 40,000 people. The vast majority of infected individuals are from China. The Coronavirus killed more than 800 and is spread to almost 30 countries. The rifle effect can be lasting and choppy, given that China is an essential country for the global economy.
Over the past 40 years, China had an extraordinary economic surge. It resulted in the country becoming the world’s second-biggest economy with a GDP of $13.tn. Annualized growth of seven percent and more has become the norm. Thus, this number is way beyond the capacity of developed economies.
China was able to do that by usurping the United States as the fulcrum of global trade. In the world, Beijing is the largest trader of merchandise. The country is fast catching the United States in commercial services following an eighteen percent growth spurt in 2018. They have a long-held practice of widgets and sourcing components from Chinese companies. China has a growing and vast domestic market. It encouraged thousands of reign businesses to open their factories on the mainland and to join open shops and local distribution networks.
To a diverse range of global supply chains, China is also central. Before being turned into a manufactured product, much of the world’s material travels to China. Last year there was a battle with the United States over import tariffs on billions of dollars worth of goods. The war has illustrated the power of the Chinese economy to disturb and disrupt the global outlook.
Industry in China
Over two weeks around the Lunar New Year, most industries in China shut down. There were no expectations that the majority of factories would open again until this weekend. Some of them most probably won’t open until February 14 as a precaution. Under the lockdown remain the tens of millions of people in dozens of cities across the country.
Ports are far quieter than usual; coffee outlets are closed, and carmakers are shutting plants. That is the current situation in China. Small and medium-sized businesses are in trouble. They usually operate on short-term contracts and with only low physical and small financial reserves. There were reports out from regions across China’s central belt. They tell that livestock farmers are only days away from running out of feed.
Wuhan is a city of around 11 million people and the center of the outbreak. It is also a regional hub, a large industrial center, a magnet of foreign firms, and an essential cog in the automotive industry. Wuhan has two top-10 universities and is the third-largest education and scientific base in China. Of course, the weeks of standstill will have a considerable impact on economic output. Xi Jinping is the President of China. He acknowledged that fact last week. The Chinese authorities are redoubling efforts to shore up the economy by slashing tariffs on United States imports.
Let’s see how China will deal with the current difficult situation.