Leland Miller is the CEO of the China Beige Book. In late February, MarketWatch interviewed with him. Miller warned that economic deterioration caused by the novel coronavirus was the worse than we think. The firm of Miller released a new report that confirms that earlier view, on Monday.
Millar said that results are worse. More firms are reporting in for the final first-quarter tally. Moreover, the parts of the country unwind government restrictions on travel and movement intended to contain the spread of the deadly pathogen. CBB’s report says that results are continuing to deteriorate even into mid-March when most firms were re-opening and supposedly back to work.
Miller says that investors must understand how bad the situation is in China. It is because they will be able to read official reports with some healthy skepticism.
He says that there are going to be mixed signals sent to markets. There will be gloom in the United States and Europe, but growth in China. That will be very much alluring. Nevertheless, it will be wrong.
Particularly, Miller is expecting that the government of China will report a March recovery. And the data from then on will shoot to the moon. It will allow President Xi Jinping to appear to have met the growth targets.
Miller says that investors need to know that the economy of China has fallen off a cliff. It is because it was the epicenter of the coronavirus blow. The virus is now rippling around the world. The report explains that the China recovery story is longer just about domestic resilience. Nevertheless, it is also factoring beyond the control of Beijing.
Leland Miller Continues
In an interview, Miller said that Chinese factories went down just when the world badly needed auto part supplies. The Covid-19 was first identified in December in Wuhan, China. Wuhan is an auto-manufacturing hub in the province of Hubei. Now, as demand falls off a cliff, factories are being cranked back online. There you will have an oversupply.
The rest of the world undergoes the sort of severe restriction. Nevertheless, China went to those critical restrictions weeks ago. That is what Miller noted. The global mitigation efforts from the biological threat will most probably throw much of the globe into a severe recession.
In short terms, that oversupply might lead not just to destabilized global markets. Nevertheless, it might lead to more trade tensions. The administration of the United States President Donald Trump made supply gluts as a major pillar of its negotiations with China.
Nevertheless, in the long term, Miller thinks that global interconnectedness will be the biggest victim of the illness. It is derived from the novel coronavirus strain. Firms are spending years thinking about rerouting supply chains away from China. Between the trade throughout 2019 and the current coronavirus, that might finally be the point where people say, no more. Thus, there are too many implications. Miller suggested that countries might adopt more isolationist policies and reroute their supply chains.
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Nevertheless, some industries might be able to decouple.
