Coronavirus is the Black Swan that might finally sink the markets, by Ambrose Pritchard-Evans.
The workshop of the world is closed. China is on a total-war footing. The Communist Party has evoked the “spirit of 1937” and mobilised all the instruments of its totalitarian surveillance system to fight both coronavirus, and the truth. Make GDP forecasts if you dare.
As of this week two-thirds of the Chinese economy remains shut. Over 80pc of its manufacturing industry is closed, rising to 90pc for exporters. The Chinese economy is 17pc of the world economy and deeply-integrated into international supply chains. It was just 4.5pc of world GDP during the SARS epidemic 2003, which some like to use as a reassuring template.
You cannot shut down China for long these days without shutting down the world. …
There is an inherent contradiction in the market’s nonchalance. Yes, it is possible that China’s 50-million lockdown and use of extreme surveillance and coercive power will accelerate the process of “contact tracking”, catching enough of those infected before they can spread it further.
But the more thoroughly China enforces this, the greater the global economic shock is likely to be. How can industrial plants really be reopened next week? Yet if it takes another month, it becomes progressively harder to contain the international economic damage