By Keith Bradsher
China’s business leaders know better than to argue with Beijing. Leave the politics to the Communist Party, they long ago concluded, and the government will let them make money in peace.
A vicious viral outbreak has upended that formula. China’s typically supercharged economy has ground to a near standstill as the authorities battle a coronavirus that has killed more than 2,000 people and sickened tens of thousands more.
Hundreds of millions of people now live essentially in isolation, as roadblocks seal off entire towns and the local authorities stop companies from reopening. Business leaders and economists in China are increasingly saying, Enough. While China must stop the outbreak, they argue, some of its methods are hurting the lives and livelihoods of millions of people while contributing little to the containment effort.
“Strike a balance that is conducive to protecting lives,” wrote James Liang, the executive chairman of Trip.com, China’s dominant online travel agency, in a widely circulated essay this week.If the country becomes poorer because of emergency health measures, Liang warned, that might hurt public health more than the virus itself.
No one questions that the disease is still a serious problem, particularly in Hubei province and its capital, Wuhan. More than 70,000 people have been stricken, according to official figures. Foreign medical experts have suggested the true total may be much higher.
Nevertheless, business leaders and economists are beginning to ask whether mandatory 14-day quarantines, roadblocks and checkpoints are really required across much of the country, especially in provinces far from Hubei where there have been fairly few cases. The debate is unusual in a country where dissent is usually censored or squelched.
Even topics like business and the economy, once considered relatively fair game for discussion, have become sensitive as China’s economy has slowed and as the Communist Party has tightened its grip on more aspects of Chinese life.Still, even the Chinese government has acknowledged the wounds inflicted on the country’s economy, further fueling national discussion of when enough might be enough.
“If the epidemic lasts for a long time, agricultural products, food and industries with long industrial chains and labor-intensive industries are expected to be greatly affected,” said Li Xingqian, the Commerce Ministry’s director of foreign investment, at a news briefing in Beijing on Thursday.
The ripples are spreading far beyond China, hitting companies like Apple, General Motors and Adidas. Amazon, the e-retailing giant, is taking steps to keep its virtual shelves stocked. Beijing is striking a difficult balancing act. It is urging officials across the country to continue to wage what Xi Jinping, the country’s top leader, has called “the people’s war.”
At the same time, it has urged workers and farmers to get back on the job and has taken steps to help businesses. On Thursday, it cut lending rates to give businesses more access to money. Many of China’s businesses, particularly small ones, appear to be in trouble.
One-third of small firms in the country are on the brink of running out of cash over the next four weeks, according to a survey of 1,000 business owners by Peking University and Tsinghua University. Another third will run out of cash in the next two months.
Beijing’s options are risky. New data on Thursday showed that the number of newly confirmed infections had plunged sharply. Much of that drop, however, appeared to reflect a narrowing in the definition of a confirmed infection. Chinese health officials insist that it is too soon simply to dismantle the many measures they have imposed.
“We actively support the orderly resumption of work and production, but we still cannot relax our vigilance in the slightest,” said Zheng Jin, the spokeswoman for the Shanghai Municipal Health Commission, at a news briefing on Thursday.
Signs of progress combined with growing worries over the economy have, nevertheless, spurred calls for Beijing to loosen up. A team of Chinese economists, mainly at Peking University and the brokerage Huachuang Securities, wrote a widely circulated online analysis last week that took a critical look at the containment effort. Too many areas of China with few coronavirus cases were trying so hard to stop the virus that they were preventing normal commerce among cities, they argued.
“If all regions rely on blocking, they may block viruses, but they may also block the economy,” the economists wrote in an essay that first appeared in Caixin, one of China’s best-regarded publications. “At that time, a wave of corporate closures and unemployment may occur, worse than the current epidemic.”
No single business or city can resume regular activity by itself, because every company and community needs materials and workers from elsewhere, wrote Lu Zhengwei, chief economist at Industrial Bank in Fujian province, in an online posting this week. “It is necessary to restore normal urban life” for the economy to rebound, he added.
Should Beijing ease back too quickly, however, it could allow large numbers of workers to gather together in their factories and offices in ways that might reinvigorate the spread of the coronavirus — something that neither business leaders nor the government wants to see.
E-commerce China Dangdang, an online retailer based in Beijing, ran into that nightmare this week. One of the company’s employees ran a fever Tuesday, and by Wednesday evening, the Chinese Center for Disease Control and Prevention had diagnosed the coronavirus as the cause.
The company said it had ordered all employees to work from home. Employees who sat near the infected worker have been quarantined at their homes.Working from home may be an option for companies like Dangdang, but manufacturers do not have that luxury.
Many factories are still operating at a small fraction of capacity, even as businesses all over the world watch their inventories of products and components that are made in China dwindle. Incremental moves are starting to be made to offset the effects of stringent curbs imposed on the movement of people and goods.
Cities are starting to arrange special trains to take migrant workers back from hometowns that they visited over the recent Lunar New Year holiday.
The city of Hangzhou announced that it had arranged one high-speed train to bring more than 600 workers back from the central Henan province and another high-speed train to bring back 750 workers from the western Sichuan province.Worried about job losses, some officials are paying companies to hire.
Xi’an, a city in northwestern China, announced that it was offering a one-time subsidy of $285 for each worker hired by companies making medical protective gear, and as much as $430 per worker for companies in any industry that hire large numbers.
Chinese officials are also keeping a sharp eye on grocery bills. Even before the coronavirus hit, food prices were surging more than 15% a year in China by last autumn. A different epidemic, the African swine fever, had swiftly killed half the country’s pigs, its main source of protein.
Now the coronavirus threatens to send food prices even higher. The Agriculture Ministry has ordered villages all over the country to take down the roadblocks and checkpoints and to allow movements of animal feed and livestock.
But there have already been reports of mass slaughters of poultry for lack of feed, and chicken prices have temporarily plunged — in a possible sign of panic selling.“The overall impact of production shutdowns on agriculture across the country,” Lu of Industrial Bank wrote this week, “cannot be underestimated.”
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By Keith Bradsher