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DanaThomas posted an update 6 years, 2 months ago
Evans-Pritchard in the Daily Telegraph: China cannot fight corona virus and also avert an economic crisis.
China is losing its battle against the 2019-nCoV viral enemy – we must brace for a global pandemic
China must be nearing the point where the social and economic costs of trying to stamp out the coronavirus by totalitarian methods are greater than the trauma of letting it run.
A normal country would eventually conclude that the more rational course is to accept that the disease can no longer be contained (given the three lost weeks of the Wuhan cover-up), treat it as a form of turbo-charged winter flu, and direct all efforts instead at managing care more coherently.
The focus would then shift to a different objective: trying to lower the death rate from apparent 1918 Spanish flu levels of 2pc to plausible levels below 1pc – still 10 times influenza flu – through anti-virals, IV drips, oxygen, and all kinds of small frictions (yes, even face masks) to lower dose thresholds and potentially virulence.
But China is not normal and the Communist Party cannot easily follow this logic. It has almost certainly gone beyond the point of no return by declaring a “people’s war” and imposing lockdowns of different sorts on more than 400 million people, and by implicitly making defeat of the contagion a test of its ruling legitimacy. It seems condemned to doubling down at this point since Guangzhou, Chongqing, and Changsha are already riddled with the virus. This political choice has big global economic consequences.
Taoran Notes – the voice of Xi Jinping’s inner circle and the medium that China experts follow very closely – hinted last night at a very nasty policy of police/military coercion in Hubei and virus hotspots. Anybody who is possibly infected must be “rounded up and placed in quarantine centers”. It is going to be Uighur treatment for tens of millions, or indeed a page from Mao’s most demented moments of social and economic havoc.
Taoran also says that Xi enforcer Chen Yixn – a sort of Beria for those familiar with Stalinism – is being sent to take over Wuhan and impose the new security regime.
Where do we now stand? Regions making up two-thirds of Chinese GDP have been closed since late January. It appears that few people have actually returned to work this week. There are a number of proxy measures to keep track of this. One is traffic congestion across 100 cities published daily with a slight delay by AMAP, China’s version of Google maps. So far there is no visible rebound.
Another is property sales in 30 big cities released every day (amazingly). Sales have collapsed to zero and have yet to show a flicker of life. Capital Economics updates each chart daily on its coronavirus page, open to the general public.
Property is a slow-burn issue compared to ruptured manufacturing supply chains, but by March it will start to bite for developers with dollar debts on Hong Kong’s funding market. Companies deemed “stressed” (borrowing costs above 15pc) have to repay $2.1bn of offshore dollar notes next month. Standard & Poor’s says they rely on a constant flow of sales to cover past debts.
Some 25 provinces and municipalities were supposed to go back to work this week but this clashed head on with virus control measures. Companies may not reopen plants unless they can track the exact movements and medical data of each worker, and comply with a 14-day quarantine period where necessary (we now learn the incubation may in fact be 24 days). Officials dare not be lenient after Xi Jinping’s latest tirade.
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Most interesting.
It will be hard to sift through the economic data points and the state-controlled media meme’s (meaning western media) to get a clear snapshot of the true state of China.
True, though things like international shipping statistics may be hard to fudge. When production slows down, order backlogs will grow and industry and wholesalers worldwide will start complaining, after which consequences on the retail level will be felt. The shortage could continue – just speculating here – for a couple of years, so a lot of those little Made in China items we buy without thinking could disappear or get more expensive.
IMO, and I could be wrong, this is a coincidence and another one of those convenient truths that allow a narrative to either a) play out or b) BE played out. Allow me to explain…
I’ve imported from China for years and learned long ago to account for the market disruptions that the Chinese new year brings EVERY YEAR. China pretty much shuts down for 3 weeks. Following this holiday is a slinky effect as the whole supply chain spools back up again. We usually account for roughly a 5-week market disruption. Here’s an article that I found that does a decent job laying it all out:
I think that the truths of both the CoV and the normal market disruption are being blurred either intentionally or unintentionally. Either way, there are a lot of conflicting narratives.
Time will tell. We should all support our local businesses and industries, whether they are online or not. A massive market correction is inevitable once cheap imports are are no longer available.
We also need to look at where our weaknesses are with regard to medical supplies and medicines which have been coming from China and, in the name of national security, support US companies.
I understand your position on local and American made products and agree. However, markets dictate price. Americans voted with their wallets long ago, hence the manufacturing base shifting east. In other words, there are products that you a) legitimately can no longer source in America or b) not competitively priced. I know the owner of Black Rifle Coffee, a veteran owned coffee business worth $100M+ they have tried for years to find an American made stainless steel vacuum sealed coffee mug and it simply doesn’t exist.
Its not the inevitable market correction that scares me, its the major gap we have in manufacturing capacity and capability. I’m originally from Ohio, a former major manufacturing hub, many of those plants/facilities aren’t just idle, they’re no longer standing.
If the war industry isn’t interested in stainless steel vacuum coffee mugs, these mugs will not be manufactured!
There is no evidence China’s leaders have any elasticity to react to real problems. China’s present challenges, which are many, may have risen, or may eventually rise to the level, and have a similar affect that the Chernobyl disaster had on the dissolution of the Soviet Union, which was only six years after the Chernobyl meltdown. Just a thought.
Scapegoating, targeted or mass repression, contradictory propaganda – their playbook seems limited. Though I think that things will go more towards the human reaction of wanting the wellbeing of the people and torebuild society, and away from the nihilistic social engineering that has dominated the regime for decades. The question is, when will that take place?