While Twitter shadow banned Thursday’s post on the coronavirus with only one like (as opposed to the usual 2k likes and retweets) I feel it’s important to follow up on that post.
This is not fear porn, it’s the economic reality of what is going on in China as well as Vietnam and Japan to a lesser extent right now. It is also the reality in US stock markets.
In China there was a ramp up in manufacturing in Dec. and early Jan. to accommodate the closing of plants due to the New Year celebration at the end of last month. A few years ago this holiday travel time in China was labeled the largest migration of mammals in world. It’s Thanksgiving, Christmas and New Years all rolled up into one long holiday.
This was also the time when the coronavirus was spreading undiagnosed or not reported by the government. So for the Chinese government to shut down travel during it should demonstrate how serious this outbreak really is.
Now instead of factories and ports reopening to replenish the trade supply to the world, especially the US, most factories and ports are dark with worker ordered to shelter at home.
With each incremental news story coming out of China the big-box retailers, online retailers and shipping companies take a hit on their stock price. Such is the dependence on cheap Chinese products.
The US retail supply chain is not nimble enough to move production out of Southeast Asia, since there are reports of the virus being found in Vietnam. The Asian nation has quarantined 10,000 citizens for coronavirus observation.
This hardship on the Chinese economy could pave the way for the eventual spread of the virus as the government battles depressionary losses due to a trade shutdown.
On the flip side, does the Trump White House — in an election year — want to see empty retail shelves over the summer? Certainly not.
The next two months will be crucial to avoiding a potential pandemic. However, can governments and companies relying on international trade endure that hardship?