EVANSVILLE, Ind., February 3 (UPI) – The spread of the coronavirus in China is causing concern among American shipping ports and industries that rely on trade with the world’s most populous nation.
The Chinese government has already forced factories and companies to slow the spread of the disease. And there is no telling how the virus will affect China’s consumer demand, even after the forced vacation ends.
“One of the things we hear is that some of their factories may remain closed until the virus is contained,” said Noel Hacegaba, deputy general manager of the Long Beach port in California. “That means sea freight won’t move. It won’t leave China. It won’t flow to the United States.”
This also means that China will not receive American goods, Hacegaba added.
Typically, agricultural products – like soybeans – are the most common goods shipped through Long Beach harbor, Hacegaba said. According to the US Trade Representative, other important export goods to China are planes, machines, electrical machines, medical instruments and vehicles.
The disruption occurred at a time when industries expected trade in China to pick up. President Donald Trump and the Chinese leaders signed a first-stage trade agreement on January 15 – the first step in ending an 18-month trade war between the two countries.
Under the agreement, China promised to buy $ 200 billion of American goods, including $ 40 billion of agricultural products. Such purchases would provide relief to US companies such as soybean producers and other agricultural interests that saw a decline in demand and a fall in prices during the trade war.
“We should consider everything that can affect China’s ability to meet these commitments,” said John Newton, chief economist at the American Farm Bureau Federation.
Newton said it was too early to speculate on how the coronavirus will affect agricultural trade in the coming months. At the federal level, for example, agencies are still assessing the situation.
“As U.S. Secretary of Commerce Wilbur Ross made it clear, the first step is to get the virus under control and help the victims of the disease,” a Department of Commerce spokesman said in an email.
“It is also important to consider the ramifications of doing business with a country that has in the past covered real risks to its own people and the rest of the world. Fortunately, the Department of Commerce is able to help the American people support and our companies to do both. “
The Chinese government has ordered all factories to remain closed at least until the beginning of this week. Other provincial governments have extended the forced holiday until February 10, said Rajiv Biswas, chief Asia Pacific economist at IHS Markit, a global analysis and information company based in London.
The factories were closed last week for the New Year celebration, Biswas said.
“Because of the long time of forced vacation, this will have a significant impact on trade,” Biswas said. “The next question is how this will affect demand in China.”
In the near future, plant closings will reduce China’s demand for imported material as non-operational facilities do not need supplies, Biswas said.
The longer-term effects are less clear. Currently, the rapid spread of the disease has dramatically slowed trade in China, he said.
“It is escalating so quickly,” said Biswas, who is based in Singapore. “There is a lot of fear because there is no good understanding of how to get it under control. Well, because people are in this state of fear, they don’t want to go out. They stay at home. They won’t be. ” buy so many things. “
It’s too early to say which markets will be hit the hardest, Biswas said. A lot depends on how quickly the spread of the virus can be curbed. A vaccine is being worked on, but how soon it could be developed is unknown.
Even if they have a vaccine, it would take months to actually make enough vaccines for the whole country, “said Biswas.” 1.3 billion people live in China. The logistics to produce a vaccine of this size are immense. I don’t think that can be stopped soon. “
