China might slowly be healing from the devastating effects of coronavirus. However, its economy has taken a hit that might take years to recover.
After its exports had taken a hit due to domestic shutdowns and travel restrictions, external factors are now playing the devil. With the world reeling with the effects of the disease, most of the Chinese markets are drying up. Factories have now begun to layoff their workers on a large scale.
A V-shaped economic recovery had been predicted for China. This was how the country recovered after the SARS pandemic of 2003. However, a devastating downturn meant that it has gone down to the 1976 levels of the draconian Cultural revolution of Mao.
WHY ARE THE EXPORTS FROM CHINA FALLING?
A multiplicity of factors are responsible for these falling exports. The downturn in recipient countries is one of these factors.
“The unprecedented shutdown of normal economic activity across Europe, the U.S. and a growing number of emerging markets is certain to cause a dramatic contraction in Chinese exports, probably in the range of a 20-45% year-on-year drop in the second quarter,” said Thomas Gatley, senior analyst at research firm Gavekal Dragonomics.
Exports are very crucial for the economic health of the Chinese country. In fact, they account for 11% of economic growth. On Tuesday, state-owned Securities Times reported Good Will Watch Case Manufacturing, a supplier to the U.S. watch brand Fossil, would put its more than 600 workers on leave for at least three months.
Another major factor leading to this is the stereotypes being created around the country. People are still wary of maintaining any touch with the Chinese. A large part of this is due to President Donald Trump. The President has been relentless in his criticism of the Chinese. His tirades were borderline racist when he labelled coronavirus as the “Chinese Virus”.
However, the worst affected will be the poor workers. The scale of Chinese employment was anyway not great due to the United States of America and China trade war. This might worsen things up to the greatest degree yet possible.