The coronavirus has been a worldwide scare for the last six weeks, impacting daily lives particularly in Asia, and curbing free movement and travel. What had appeared to be a transient viral infection that presumably transferred from animals to humans from a wet market in Wuhan, the capital of China’s Hubei province, has spread to other parts of the country and beyond. The World Health Organization has named this illness COVID-19 and declared it to be a public emergency of international concern. At the time of writing, the coronavirus had spread to 29 countries, infecting 75,725 people of which 2126 people have died, 16,233 have recovered fully, according to figures released by China’s NHC.
On an individual level, catching the infection can be dangerous for those with weak immune systems and the elderly, though 80% of the cases reported have displayed ‘mild’ symptoms. Exercising caution, avoiding crowded places, keeping hands clean with hand sanitizers, wearing face masks and avoiding touching the face, are some ways to keep the infection at bay. Those suffering from flu-type symptoms, like cold, cough and respiratory tract infections, can display responsible behavior by keeping everyone at a distance, not touching or shaking hands, covering their face and mouth while sneezing, and if possible, self-quarantine themselves to shield others. Governments and enterprises have put checks in place, body temperatures are being checked at entry points at airports, shopping malls, hotels etc.
The coronavirus has disrupted normal life in China and beyond. Few epidemics have had such a profound impact on manufacturing, travel and tourism and trade. The most affected nations besides China, are Singapore, Malaysia, South Korea, Thailand, Taiwan, Hong Kong and Japan. In fact, the whole of South East Asia, is inextricably tied to China.
London’s Overseas Development Institute, in a recent paper, estimates that the coronavirus is likely to cost the global economy up to USD 360 billion. It states that a 1% decline in Chinese demand would make lower income countries lose around $4 billion worth of goods and 0.6% in tourism revenue. The most vulnerable are Asian and ASEAN countries like Mongolia, Cambodia and Laos, followed by Myanmar, Philippines and Vietnam that export 1/6th of their total to China and receive 20% of their tourists from China.
China’s situation is affecting the world
For more than a decade the world has been looking at China with awe, as it scaled to become the world’s second largest economy, the ‘fulcrum of global trade’, leading industrial growth and innovation, and establishing a strong presence in developing countries, contributing to their growth. China’s economy has been disrupted badly, and the impact is spilling over not just to neighboring countries, but worldwide. Now Chinese nationals face entry restrictions in 60 countries, and Chinese tourists, known to be among the biggest spenders, having spent USD 277 billion worldwide in 2018, now cannot step out of their country. Over 48 million people have been affected by this restriction on travel. Its cities look deserted, schools and factories are shut, consumption levels down, the morale even more so.
China’s population of 1.43 billion offers a huge market for goods and services from all over the world. As the largest importer of oil and gas, a decline in its demand has caused oil prices to dip by USD 10 per barrel.
China controls multiple global supply chains, as raw materials are imported into the country and finished goods exported. Components and widgets are sourced from Chinese companies, thousands of manufacturers from other countries have set up factories in China, and distribution networks help their products reach local and foreign markets. The world’s biggest brands have exclusive outlets in major Chinese cities which generate revenue to the tune of millions of dollars.
All these businesses are now closing shop indefinitely. American brands like Levi’s, Starbucks, McDonald’s, and hotel chains like Hilton have shut 150 of their hotels in the country, not to mention the thousands of room cancellations within China, and by Chinese tourists going abroad.
Stock markets have tumbled as well, as demand slackens, the Shanghai stock market showing a sharp fall, Tokyo’s stock market being volatile for the present. The fear of a longer shutdown can have a bigger impact and shake investor confidence.
Ports are witnessing a drop in container volumes since Chinese imports of even consumer goods have fallen. Cruise ships are impacted, and passengers have been quarantined. American carriers like Delta, United and American airlines have canceled all their China flights till end of April. Tourists have canceled tickets and hotel bookings and are being exempted from paying the cancellation charges.
Aptitude tests like the SAT for admission to American universities, scheduled in March, has been cancelled in mainland China, jeopardizing higher education opportunities for thousands of Chinese students aspiring to study in the US.
Australia is seeing a drop in college enrollment of Chinese students in the new academic year, and losing out on Chinese tourists, just as much as UK, Europe and Japan. Japan is expecting cancellations from 400,000 tourists in the first quarter of the year.
Wuhan’s woes
Wuhan is a massive industrial hub, a tier-2 city in China, and is cut off from the world today since it is the epicenter of the coronavirus. It is home to the country’s steel industry, a prominent hub for oil and gas.
It is a big center for education with 83 institutions of higher education including two of China’s top universities, teaching 500,000 students. Foreign firms have preferred setting up plants and offices here, more than any other Chinese city. It boasts of the presence of 300 out of the top 500 global companies, factories and a transportation network with its waterways and most train routes going through the city.
Over 11 million residents of the city are locked in now. Foreigners including international students have been evacuated by their respective countries, embassies closed, and airports and railway stations have been shut. Health officials are conducting temperature checks in every house, a stadium and exhibition center converted into large quarantine enters and filled with mass confinements, and hospitals have been constructed in less than two weeks to treat those infected.
Wuhan looks like a ghost town, a pall of gloom and fear overcast, the next fear being of food shortages since the city has been cordoned off. There is no sign of the illness or the tension abating, and no indications when life will return to normal in this city.
Economic Impact on Myanmar
Myanmar shares a 2204-kilometer border with China, the latter being Myanmar’s largest export market, accounting for over 42% of its total exports, border trade being the highest. Myanmar’s commerce ministry revealed that it is losing nearly USD 16 million per day since border trade has dried up – there are no Chinese customers waiting across the border, being unable to reach, due to travel restrictions.
Government figures show that China imported goods worth $ 1.4 billion from Myanmar and exported goods worth $ 680 million, between October 2019 and January 2020. Myanmar exports seafood to China, crabs, in particular. The Labutta township with 130 wholesale centers, used to export more than 10 tons of crab per day. This having stopped, crab workers are without jobs. Watermelons, 600 trucks of which crossed daily from the Muse gate into China, have stopped being imported by China. The Yunnan province has huge stockpiles of the fruit, that is now being sold locally at much cheaper rates. Other exports that have stopped are musk melons, tissue-culture bananas and oil.
Myanmar’s garment sector is also suffering, factories are slowing down production since fabric supplies are running low. The 7Day news Daily stated that up to 90% of the total fabric comes from China while Vietnam, South Korea and Indonesia together providing only 10% of the raw materials.
The coronavirus has proved the need to diversify exports and seek alternative markets for Myanmar produce. This will make Myanmar less vulnerable to a single trade partner. Exploring options to increase trade with other neighboring countries would help secure trade and diversify risks posed by such pandemics.
Myanmar has stopped giving visa on arrival to Chinese visitors and travel agencies have been told to not provide services to the Chinese. The Chinese are also not issuing visas to Myanmar traders. Twelve airlines’ flights between Chinese cities and Myanmar have been temporarily stopped and the two Myanmar airlines, MAI and MNA have suspended flight operations to China for the time being. The vigilance displayed by the government is helping make Myanmar less vulnerable to the coronavirus infection, to prevent further economic damage as well as safeguard the health and well being of the people.
The coronavirus is bound to impact economies adversely in the short term. China alone could see a decline in its growth rate by 0.5 to 1.0%, according to the Economist Intelligence Unit. This will not just be due to man-days lost, but also due to increased healthcare expenditure leaving less for other sectors. The wait is on for new cases to stop appearing, and death rates to decline. The fear must subside, the numbers need to reveal a declining trend , and only then will the world heave a sigh of relief.
