Coronavirus Could Be The End Of China As A Global Manufacturing Hub

The new coronavirus Covid-19 will end up being the final curtain on China’s nearly 30 year role as the world’s leading manufacturer.

“Using China as a hub…that model died this week, I think,” says Vladimir Signorelli, head of Bretton Woods Research, a macro investment research firm.

China’s economy is getting hit much harder by the coronavirus outbreak than markets currently recognize. Wall Street appeared to be the last to realize this last week. The S&P 500 fell over 8%, the worst performing market of all the big coronavirus infected nations. Even Italy, which has over a thousand cases now, did better last week than the U.S.

China On Hold

On January 23, Beijing ordered the extension of the Lunar New Year holiday, postponing a return to work. The coronavirus was spreading fast in the epicenter province of Hubei and the last thing China wanted was for that to be repeated elsewhere. Travel restrictions and quarantines of nearly 60 million people drove business activity to a standstill.

Trump administration takes shape: President-elect completes top 15 Cabinet picks

Dartmouth sorority, fraternity members face charges after death of student, 20, at party

Civil Air Patrol plane crash during Colorado training exercise leaves 2 dead, 1 injured

Officials Vow Justice After American, Five Tourists Killed in Poisoning

Dallas mayor who abandoned Democratic Party says more will follow

Trump taps Texan Brooke Rollins as agriculture secretary

Former Police Officer Who Beat Homeless Man at VA Hospital Gets Maximum Possible Sentence

Trump taps Brooke Rollins to lead the Department of Agriculture

Building Super Allegedly Befriends 100-Year-Old Tenant, Gains Power of Attorney for Massive Betrayal

UFC President Dana White Makes Big Political Promise Post-Trump Victory

Teen May Be Charged as an Adult After 13-Year-Old Cheerleader Found Dead in the Woods

Ric Grenell under consideration to be Trump’s point man on Ukraine: report

Steelers Receiver Fights with Opponent During Final Play of Team’s Crushing Loss

Ernst burnishes pork-cutting credentials by leading DOGE Senate Caucus

Cop Who Shot Ashli Babbitt’s Disciplinary Record Revealed in Report – He Should’ve Been Off the Force

The most frightening aspect of this crisis is not the short-term economic damage it is causing, but the potential long-lasting disruption to supply chains, Shehzad H. Qazi, the managing director of China Beige Book, wrote in Barron’s on Friday.

Chinese auto manufacturers and chemical plants have reported more closures than other sectors, Qazi wrote. IT workers have not returned to most firms as of last week. Shipping and logistics companies have reported higher closure rates than the national average. “The ripple effects of this severe disruption will be felt through the global auto parts, electronics, and pharmaceutical supply chains for months to come,” he wrote.

That China is losing its prowess as the only game in town for whatever widget one wants to make was already under way. It was moving at a panda bear’s pace, though, and mostly because companies were doing what they always do – search the world with the lowest costs of production. Maybe that meant labor costs. Maybe it meant regulations of some kind or another. They were already doing that as China moves up the ladder in terms of wages and environmental regulations.

Under President Trump, that slow moving panda moved a little faster. Companies didn’t like the uncertainty of tariffs. They sourced elsewhere. Their China partners moved to Vietnam, Bangladesh and throughout southeast Asia.

Enter the mysterious coronavirus, believed to have come from a species of bat in Wuhan, and anyone who wanted to wait out Trump is now forced to reconsider their decade long dependence on China.