The economic impact of the coronavirus outbreak in China continues to be felt as businesses struggle to resume operations after the extended Lunar New Year holiday. With more than 1,300 deaths in mainland China, the virus has caused delays in the resumption of work in many provinces, leading to logistical nightmares for enterprises.
According to Nomura’s chief China economist, Ting Lu, local governments are prioritizing virus containment, resulting in poor coordination and excessive roadblocks for businesses. The shortage of face masks needed for employees to return to work has further hindered progress, with some companies opting for remote work arrangements.
Data from Morgan Stanley shows a 42.2% decrease in daily power coal consumption compared to last year, highlighting the impact on industrial activity. Additionally, only 57.8% of coal mines have resumed work, and the number of people returning to major cities remains significantly lower than usual.
The situation has also affected e-commerce merchants, with Alibaba reporting disruptions to merchant operations and delayed deliveries. The company expects the virus to negatively impact revenue growth for the March quarter.
Small and medium-sized enterprises are particularly vulnerable, with a survey showing that over 90% have delayed resuming business. More than half of the businesses surveyed fear they may not survive for three months if the virus persists.
Moody’s has warned of increased loan delinquencies for Chinese banks due to the outbreak. While government support policies have been implemented, the duration of the virus outbreak will ultimately determine its long-term impact on China’s economy.