2020 is now almost 2 months old and, it hasn’t been one of the easiest newborns.
Starting with the US-Iran tensions with the killing of Soleimani threatening global security in the early days of the new decade, we now witness a new problem of this troublesome child; it caught the flu, a really bad one.
Since the end of 2019 a few doctors in Wuhan, capital of Hubei, realized that a new kind of virus was spreading across the city and, that it wasn’t something usual. Such discussions were at first downplayed by the government as deemed not relevant but, few weeks later and the Chinese government installed a massive lockout of the city and, released the data of thousands of infections revealing the death rate of the disease.
The protagonist of this story is a component of the Corona viruses family, some sort of cousin of SARS which decided to present itself to the human population in 2002, the new subject has been just recently called COVID-19 by the WHO.
There already have been a lot of discussions and, a widespread concern about China’s attitude towards this crisis, with its behaviour reminiscent in some way of the Chernobyl crisis in 1986, characterized both by secrecy of the government and slowness of reactions but I will try to not focus on this aspect as I do not have strict connections with the Chinese government in order to reveal new data or insights.
One aspect which I will try to delve into is the economic and social impact of this crisis.
The contemporary world is globalized connected fast and, a lot of other qualities which are very often repeated to us as a sort of globalization mantra with no real meaning or context; this virus, in my opinion, adds a lot of context to the contemporary global structure of our society.
Even if we are witnessing one of the biggest, and strictest, regimes of quarantine ever made, locking an entire city of 11 million people the virus seems to still spread and make victims. Some may argue that a death rate of 2% isn’t something that we have to worry about too much but, when the numbers are so high and, the death toll is reaching the 2000 people mark the whole world is really concerned.
I said earlier that the virus adds context to the globalization discussion and I will explain my consideration.
A lot of Chinese companies and, the Chinese stock market have experienced crashes and big losses, even if they are slowly recovering this is a dangerous phenomenon which, we still cannot measure fully, many economist think that Chinese economy will slow from 6% growth of GDP in 2019, which was already down a lot from the 10.2% in 2010, to about 5% in 2020 with repercussions that may be present for years to come. The shutdown of factories, and lack of workers means that export is decreasing a lot and, many nations with close economic ties to China, such as South Korea and Japan are experiencing strongly the effects, with the former declaring an economic emergency while the latter is in a high risk of economic recession due to the hit to the car manufacturing industry, relying on imports from China and, its slowing economy.
The second largest economy in the world had also deployed massive plans to the Belt and Road Initiative which will most likely suffer delays, as most government stimulus will be focused on giving back power to affected consumers.
As we’ve seen the virus, almost exclusively present in China is affecting strongly the whole continent but, we can already see some effects in other parts of the world such as in Europe. The biggest economy of the old continent relies heavily on its automotive industry and, just like Japan has problems with the Toyota and Nissan factories, so does Germany with Volkswagen and BMW, which had started an investment campaign in China few months ago.
Going even farther the virus is having effect on Apple’s balance which, has already announced that it won’t meet the expected earnings of Q1 2020.
The economic aspect looks really bad and, it isn’t very encouraging for 2020, the general distrust has also led some countries to limit access of Chinese people while others, like Italy, have completely banned flights from-and-to China, cruise ships all over the world are being held at national ports and, the whole world is tangling itself in this issue.