As the coronavirus crisis deepens, china remains closed for business  | thearticle

Stricken by the devastating impact of coronavirus, China’s economy is struggling to restart after the Lunar New Year holiday. Local officials and company executives face an agonising choice

between the need to resume production and the risk of infection among their workers. The governments of Shenzhen and Zhengzhou cities — large industrial hubs in Guangdong and Henan provinces

— have refused permission to Foxconn, China’s largest employer, to reopen its giant factories. Tencent, Alibaba, Meituan and ByteDance, among the biggest technology companies in the world,

have extended for a week their policies of work-from-home. The German automaker BMW has postponed resumption of production until February 17, depending on the epidemic. Volkswagen is also

keeping most of the plants it runs with Chinese partner SAIC closed until next week. Heilongjiang province, in the northeast, has instructed employers in cities with many cases of the virus

to extend the holiday by a further two weeks. Shanghai and Zhejiang, Jiangsu and Guangdong provinces have ordered schools to remain closed for the rest of February. The epidemic is

spreading. As of Tuesday morning Beijing time, more than 43,100 people had been infected and well over 1,000 had died. On Monday, the National Bureau of Statistics said that consumer price

inflation in January increased 5.4 per cent year-on-year. Food prices rose 20.6 per cent in January, and pork prices soared 116 per cent. The State Council wants to get the economy back to

work and end a shutdown that has already lasted three weeks. Normally, millions of workers return from their home places after the Lunar New Year holiday to their places of work. But

transport has been sharply reduced. Beijing has banned all long-haul bus services linking the city to the rest of the country. Fearing contamination, many do not wish to work in close

proximity with other people; they prefer to work at home. Offices and factories that employ thousands of people offer potential conditions for spreading the disease. Public health experts in

Shenzhen told Foxconn that its factories there faced “high risks of coronavirus infection”. These risks include poor airflow of restaurants and employee dormitories. “Violation of epidemic

prevention and control could potentially face the death penalty,” said a memo at an internal meeting. Foxconn makes Apple’s iPhone. This is the severe dilemma for employers. On the one side,

they have orders from domestic and foreign clients and the need to generate revenue to pay wages and benefits, rent, running costs and bank loans. On the other side, they have the

obligation to prevent an outbreak on their premises that could lead to official penalties and a long-term closure of production. The shutdown is especially evident in the capital, Beijing.

On Monday, few people took the subway or buses or entered buildings in the main business districts. The government is desperate to insulate the capital as well as possible from the virus. As

of Sunday, there were 337 cases and two deaths in the city. Most of Beijing’s 20 million people remain shut up at home. Housing complexes have erected barriers to prevent people entering.

On the orders of the authorities, supermarkets and convenience shops remain open. There are still no signs of food shortages. But most other shops are closed, as well as restaurants, where

people do not dare to eat. Many foreigners, including diplomats, are leaving the city. Beijing residents can order goods online – but there are few people to deliver them. And they have the

items placed far from their home to limit the danger of infection from the courier. Another obstacle to the resumption of normal production is the fact that China’s companies are linked by

nationwide and province-wide supply lines. During the last 20 years, China has built one of the world’s densest networks of high-speed trains, highways, airports and river transport. This

has allowed construction of sophisticated networks that link factories to suppliers hundreds or thousands of kilometres away. In the present emergency, this dependence has become a

liability. Hubei province, in central China, is the hub of the epidemic. At least 59 million of its people remain under quarantine. It is a critical province in this national production

chain – for optical goods and lasers, auto supplies, medical devices, aircraft and machine tools. Most economists believe that China will be unable to achieve a growth of six per cent in

2020, because of the virus. The effects of the shutdown are being felt far from China. Last week Fiat Chrysler warned that it may be forced to stop production in Europe because it cannot

obtain from China the parts it needs. Even if a pandemic can be prevented, the Chinese coronovirus crisis is certain to slow down global growth.