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.

Husband of American woman missing in the Bahamas speaks out for first time, says he is ‘heartbroken’

5 US House races shift toward Democrats: Cook Political Report

Trump Touts ‘Golden Age of the Middle East’ After Iran Ceasefire: ‘Big Money Will Be Made’

Meet the Trump-Endorsed Prosecutor Who Just Won the Race to Replace MTG

Trump, Rubio face NATO chief as US moves to ‘reexamine’ alliance after Iran clash

Trump, Iran agree to 2-week ceasefire and more top headlines

Teamsters still bankrolling Democrats, including Jay Jones, despite openly flirting with Trump and GOP

NATO’s Rutte heads to White House to make peace with Trump

AOC doubles down on call for Trump’s ouster even after ceasefire announcement

Inside Antifa-linked group’s plan to ‘structurally change’ the US as May Day unrest approaches

Somali refugee bought $1 million home the same year he was accused of defrauding taxpayers

Michigan Senate hopeful Abdul El-Sayed’s unapologetic embrace of Hasan Piker

Terror suspects indicted after allegedly throwing bombs at NYC protest outside mayor’s mansion

A-10 Warthog given new maritime role targeting boats in Iran after efforts to retire aircraft

Breaking: Oil Plummets After Trump Announces Iran Ceasefire

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.