I don't often subscribe to paywalled news sources, but Caixin Global is well worth the price. A new article: In Depth: China’s Titanic Challenge Curing Virus-Stricken Economy. Excerpt:
Yao Tong, a quality inspector at Foxconn’s factory in Shenzhen, never expected his Lunar New Year holiday to drag on for 44 days when he headed home to Hunan in January. Like most of China’s millions of migrant workers, he thought it would be just another week-long family celebration.
In the following weeks, the novel coronavirus outbreak that hit Wuhan in Hubei province quickly spread across the country, forcing authorities to freeze public transit and extend holidays to contain the illness. Economic activity ground to a halt in much of China as the Covid-19 virus sickened more than 75,000 people.
Even as the fight against the viral epidemic is far from over, China now faces a titanic challenge getting the world’s second-largest economy back into operation. On Feb. 6, a central government office overseeing efforts to control the spread of the Covid-19 virus called for an orderly resumption of business as the epidemic situation outside Hubei showed signs of stabilizing.
But it’s becoming clear that a full recovery will take some time. With China’s production system relying on millions of migrant workers, factories are struggling to simultaneously repopulate factory floors and limit the risks of contagion. Some including Foxconn are competing for workers by offering bounties while also putting returning employees in quarantine.
Meanwhile, disrupted supply chains are holding down production. Some enterprises have had to stop accepting new business as global customers cancel orders. Companies face soaring costs and plunging revenue even as authorities do what they can to jump-start the economy, which was already slowing before the epidemic.
“Overall economic activity remains sluggish,” said Wang Tao, chief China economist at UBS. The next one to two weeks will be crucial, and the epidemic’s actual impact on the economy will depend on how China can balance disease control efforts and resumption of production, Wang said. The central government is likely to expand fiscal spending on health care and infrastructure to support recovery and allow higher budget deficit, she said.
Idled production lines have sent jitters through global supply chains. Last week, Apple Inc. warned that it might miss its revenue guidance for the March quarter because of work slowdowns by suppliers. Foxconn’s Zhengzhou plant alone produces nearly 40% of all iPhones.
Foxconn, the world's largest electronics manufacturer with nearly 1 million workers in Shenzhen, Zhenzhou and other Chinese cities, shut down its factories amid the outbreak. It was not until Feb. 15 that Yao in Hunan and his colleagues across China received word to come back to work. All workers except those at the outbreak’s epicenter in Hubei province were told to return to factories by Feb. 19. But before they could resume work, most workers were told to stay in remodeled factory dormitories for a 14-day quarantine, according to Yao.
“The food is good, with milk and apples,” Yao said. He was pleased with the life in quarantine, he said.
