Slowed by the coronavirus, China Inc. struggles to reopen
Airbus is slowly restarting its assembly line in China. General Motors began limited production Saturday. Toyota followed Monday morning.
Fitfully and painfully — and with some worried prodding from Beijing — China is trying to reopen for business.
The world’s second-largest economy practically shut down three weeks ago as a viral outbreak sickened tens of thousands of people, unexpectedly lengthening a Chinese holiday. The freeze set off warnings that the global economy could be in jeopardy if the world’s pre-eminent manufacturing powerhouse stayed shut for long.
Now, as some factories rumble back into action, the monumental task of restarting China is becoming clear. China’s efforts to contain the virus are clashing with its push to get the country back to work, requiring the country’s leaders to strike a balance between keeping people safe and getting vital industries back on track.
Chinese leaders called this past week for more emphasis on reviving the economy. But many of the factories that have reopened are operating well below capacity, say companies and experts. Quarantines, blocked roads and checkpoints are stopping millions of workers from returning to their jobs. Supply lines have been severed.
Meanwhile, China’s annual auto show, one of the industry’s biggest international events, is being postponed in response to the virus, The Associated Press reported. Scheduled for April 21-30 in Beijing, Auto China 2020 will be moved to an undetermined date.
Even to start up again, Chinese officials are requiring businesses to provide masks to workers, record their temperatures and track their movements to make sure they haven’t come into contact with the coronavirus, named COVID-19.
“The kind of fear and freeze that has taken hold in terms of economic activity is likely to persist,” said George Magnus, a research associate at Oxford University’s China Center. “I don’t really see a good outcome.”
The ripples have continued to spread around the world. Prime Minister Lee Hsien Loong of Singapore warned Friday that the citystate could fall into recession as a result of the outbreak. Germany, Europe’s business powerhouse, on Friday reported slowing economic growth at the end of 2019, prompting fears the virus could delay a recovery.
As the new week begins, China’s mighty manufacturing machine showed glimmers of revving up again.
Airbus, the European aircraft-maker, said that it began to reopen its narrowbody jet assembly operations last week in Tianjin but that it would only “gradually increase production, whilst implementing all required health and safety measures.” Airbus needs the production: It acknowledged Thursday that it could not meet global demand for narrow-body jets, which airlines are clamoring for after the grounding of Boeing’s 737 Max jet.
Volkswagen said that it partially restarted one of its 15 assembly plants in China on Thursday and that it planned to reopen the rest gradually. GM said that it had begun a gradual process Saturday to reopen its more than a dozen assembly plants in China. Hyundai said it restarted most production Monday.
Others were more circumspect. Caterpillar, the heavy equipment company, said it reopened most plants in China last Monday at the request of government authorities, but did not offer details, like whether production had resumed. Honda said it was trying to restart production Feb. 24.
With the exception of factories producing medical protective equipment, which the Chinese government has asked to run around the clock, few businesses seem to be returning yet to their previous pace.
Toyota said that its four assembly plants had operated on two work shifts a day before the virus spread. It planned to reopen three of them Monday and Tuesday with just one shift and leave closed for now the fourth and smallest, in the western city of Chengdu.
The American Chamber of Commerce in Shanghai, which has members across much of the industrial heartland in east-central China, said that the majority of its members had restarted at least some operations. But the bulk of these members are not at full production, mainly for lack of workers, said Ker Gibbs, the chamber’s president.
The reopening of businesses means trying to bring together again much of China’s 700 millionstrong labor force after what had become a nearly three-week national holiday. At least 760 million people — slightly more than half the country’s population — are under various kinds of lockdown.