Coronavirus: Spreading Out of China and Into the Global Economy

Diya Jain ‘23

In recent months, the outbreak of the Coronavirus in Wuhan, China, sparked a wide-scale global pandemic that now rivals the infamous influenza virus in the great world of infections. As the death toll rises and outbreaks become more common, a general state of panic is beginning to fall upon the world as scientists scramble to contain the spread of the infection and citizens and leaders alike navigate a society trying to fight against a strain threatening their health on the daily. But the 2019 Novel Coronavirus is damaging much more than our immune systems; geopolitical markets have been hit just as hard, and are blowing money as fast as we are blowing our noses. 


Economic insecurity stemming from China has infected world markets across the globe, and financial analysts, like our white blood cells, are trying to find ways to fight back – to little avail. A few main layers are contributing to this staggering economic debilitation, the first sourced directly in the country and creating a domino effect that is curbing businesses across the globe. On the direct worker level, which concerns the amount of bodies working their daily jobs, consuming and trading has seen the most visible impact. As government officials in provinces across China are issuing orders to citizens to stay in their homes and avoid public assembly unless absolutely necessary, the typically bustling markets have been left deserted [1]. People are either prohibited from or afraid to go out to work, and therefore cannot produce goods and cannot make money. Less supply of produced products and a significantly lessened consumer-base to buy them leaves less money in everyone’s pockets and less economic stimulation in the region, with circulation and exchange coming to a standstill.


Decreased production coming out of China, coupled with disrupted trade regulation as experts struggle to reconcile the challenge of getting goods out and keeping the illness in, has resulted in the nation’s disengagement in global trade. Shipping through ports around the Wuhan region has either been rerouted, delayed, or stopped outright as companies try to keep their workers and their products safe. While China reels from a lack of business, the South Korean Busan port, the nearest international shipping container terminal, has become overwhelmed with shipments diverted to it from the disrupted Chinese ports [2]. It is predicted that if the port continues to work over capacity for an extended period of time, it could be detrimental to its very ability to function 


Worldwide companies have also seen challenges. Nissan, a Japanese-made car brand exported across the world, recently had to announce its reluctant shutting down of a major factory plant in the city of Kyushu, Japan, citing parts and materials shortages usually brought in from China as the main cause for their lack of inventory and inability to produce products [3]. Major hotel and airline corporations have been forced to cancel bookings and tickets in and around China as travel bans are implemented by governments worldwide. Ikea and Starbucks, staple chains with facilities around the world, have shut down their operations and branches across China and have seen financial loss as a result.


These corporate, manufacturing and societal changes can be translated clearly into quantitative data analyzing fiscal impacts of the Coronavirus. The reopening of Chinese markets following holiday closure for the Chinese New Year coincided with increased proliferation of the infection, and subsequently China’s market dropped a staggering 8% on that first open day [4]. The international stock markets have dipped considerably in recent weeks, and the global crude oil prices are lower than they have ever been, indicative of decreased demand from a nation that was formerly one of the largest utilizers of oil energy to power its multitude of factories mass-producing and shipping out millions of goods. 


When a nation such as China, whose economic practices influence every market in the world, experiences a financial hiccup originating in its country, every global market feels a little part of the pain. Geopolitical market anxiety and the number of reported cases of Coronavirus are on the same unfortunate trend: up, at a rate faster than we can account for.  The nation that has laid claim to the title of the world’s largest manufacturer and exporter has been reduced to a state of dormancy.