The economy suffers at the hands of the coronavirus

Chinese economic influence crumbles as coronavirus hinders businesses

On+Feb.+3+China+declared+the+entire+state+of+Wuhan+to+be+under+lockdown.

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On Feb. 3 China declared the entire state of Wuhan to be under lockdown.

A worldwide pandemic broke out in early 2020. 

On Jan. 30 the World Health Organization declared the coronavirus a public health emergency of international concern.  

As of Feb. 3, China has declared the entire state of Wuhan, where the outbreak began, to be under lockdown.  

The outbreak of the coronavirus and quarantine of Wuhan has sparked panic around the world.  The travel restrictions put in place have not been 100 percent successful. 

France, Canada, the United States and many more countries have confirmed cases of the coronavirus. The outbreak of this disease has had a massive negative effect on the global economy.

China is often recognized as the world’s production powerhouse. 

They are suppliers to multiple Fortune 500 companies, such as Apple, Honda, Airbus, etc. According to The Guardian, Honda alone has shut down three production plants in Wuhan, the center of the pandemic. 

The supply for the products made in China has dropped, resulting in profit loss.

The overall economy in China has tanked. Several global companies rely on China’s massive population to increase their sales. 

According to The Guardian, McDonald’s has shut down 300 restaurants — 10 percent of all the stores in the nation. The Starbucks franchise has shut down half of their 4,100 stores.

The global economy depends heavily on Chinese consumers. China is the second highest source of revenue for the global box office, just short of the U.S. 

After China shut down all cinemas across the country, the box office predicted a $1 billion hit to their revenue, according to The Guardian. China’s policies in response to the coronavirus have made big impacts on the global economy.

In response to the spread of the coronavirus and the quarantine of Wuhan, stockholders have been selling certain stocks for extremely low prices, according to US News. Not only are the companies of these stocks losing business, but their stock prices are dropping at an alarming rate.

One company that is dropping stock value is Carnival Corp. For weeks their cruise ships have been under quarantine after a former passenger was diagnosed with the coronavirus. 

According to U.S. News, 700 of the ships 3,711 passengers and crew members tested positive by early March. The stock price of Carnival Corp. has dropped 17 percent since mid-January.

Wynn Resorts is another company that is losing money fast due to coronavirus. Wynn Resorts is a U.S. company that has opened many locations in China. 

The money they make off of gambling in China is seven times higher than that of Las Vegas, according to U.S. News

Wynn Resorts had to shut down multiple locations in China. Portfolio manager Kevin Koehler calculated the losses that Wynn Resorts had to suffer.

“Wynn Resorts was losing $2.6 million per day,” said Koehler to U.S. News.

The coronavirus has made a large, short term impact on the economy. Yet, the long term effects are still unknown.

Currently, there is no known vaccine or cure for the coronavirus.  The world is unsure of how long this pandemic will last.

However, business in China — especially in Wuhan — will always have a tainted reputation.

CNBC journalist Malcolm S. McNeil predicts that the Chinese economy will suffer through a long-term recovery to regain its global market presence.

“The headlines today paint Wuhan as a pariah city, in a wartime battle and in lockdown. The Chinese Chernobyl,” McNeil said. “These characterizations will not be easily shed.”

Businesses have to be wary of relationships with China even after the coronavirus is left in the rearview. Where they chose to house factories or who they do business with could lead to liability and PR issues. 

The virus affects the confidence of consumers.

According to CNBC, recovery will take six to nine months under the best circumstances. China will have to make heavy monetary injections and issue reassurances regularly. 

The whole process will require global economic adjustments. 

For now, the coronavirus spreads without a cure and its heavy influence on the global economy has caused plenty of businesses to suffer. 

With no resolution in sight, the economy is forced to adjust to the sudden influence the coronavirus carries.

Ebenhoch can be contacted at [email protected]