In response, Ben may, a global economist at the Oxford Institute of economics, commented: it is clear that China has become a more dominant player in the world economy, and China has become more involved in the global supply chain. For the past 10 years, China has been the last straw for the global economy.
In the face of the possible impact of the epidemic on Chinas economy, the world bank and the International Monetary Fund (IMF) both voiced their confidence in Chinas economy on the 3rd, saying that Chinas economy is extremely resilient and has sufficient policy space.
Lack of consumers and decrease of business income
According to the world tourism organization, since 2014, China has become the largest source of tourism expenditure in the world. However, since the emergence of the new coronavirus, the travel ban and flight cancellation implemented by many countries may reduce Chinas overseas tourism expenditure.
Italy may lose 4.5 billion euros in tourism revenue this year, demoskopika, an Italian pollster, said Thursday. In Milans luxury shopping district, the window decorations of dozens of luxury brands are full of the flavor of Spring Festival, but rich Chinese customers do not come in as usual. Italys National Chamber of fashion estimates that the outbreak will bring the industrys sales down 1.8% in the first half of this year, compared with an increase of 3% previously expected.
Chinese logo at Milan fashion store associated press
This week, Danish mink farmers cancelled fur auctions due to the absence of Chinese buyers due to a travel ban. Many domestic and international events have now been cancelled, Jasper Christensen, chief executive of Copenhagen fur, said in a statement
Thailand and other Asian countries, which account for up to 30% of Chinese tourists, saw a sharp drop in tourism revenue and a half drop in business visitors after China called for a halt to group travel.
In an interview with CNBC last week, tay, chief investment officer of UBS groups Global Wealth Management Asia Pacific region, said it posed a threat to many economies, especially those in Asia.
If you look at Asia itself, Chinese tourism now accounts for a larger share of the economy in almost all countries.
Global businesses are under pressure
The epidemic may also affect the global economy through Chinas import and export.
According to the data of the World Trade Organization (WTO), Chinas demand for trade is growing. Since 2009, China has become the second largest importer and the largest exporter in the world.
According to the associated press, citing data from IHS Markit, an international market analysis agency, Wuhan, as a manufacturing center, interrupted the production of (local) liquid crystal and LED panels, resulting in reduced supply and driving up the production costs of manufacturers using these panels in computer displays, televisions and other products.
Related shocks could spread, such as lower production and sales of cars, as well as oil, iron ore and other raw materials prices from Australia, Brazil and African suppliers.
In the supply chain, the impact of the epidemic may be deeper. This may disrupt the global supply chain, but how long it will last is not known, rosini markani, an economist at DBRs Morningstar, a global credit rating company, told the New York Times Thursday
On February 4, Hyundai announced that it would suspend production in its largest manufacturing base in South Korea due to the interruption of parts supply caused by the outbreak of the new coronavirus, which would make Hyundai the first large-scale automobile manufacturer in the world to suspend production outside China due to the interruption of supply chain affected by the outbreak.
Most of Apples products are assembled in China. Due to the uncertainty of factory production and product sales, apple believes that the potential revenue of this quarter may face a wide range of fluctuations. On the 1st, Apple announced the temporary closure of 42 Chinese stores, which also led to further uncertainty.
Apple said Monday it would temporarily close all its stores in China due to the outbreak
The U.S. semiconductor industry is closely related to China, which is not only the main manufacturing center of the U.S. semiconductor industry, but also the market of the U.S. semiconductor products. Intels customers in China generated about $20 billion in revenue in 2019. Qualcomm, the leading manufacturer of mobile chips, is more dependent on China. 47% of its annual revenue (nearly $12 billion) comes from the Chinese market.
In an interview with CNBC last week, Timur Berg, chief economist of Singapore DBS Bank, said that countries such as Japan and Vietnam rely heavily on Chinas supply chain and explained that these economies import raw materials and parts from China to make their own products for export.
China will not only slow down and affect global demand, but also those countries that rely on China as an intermediate input, he said
If you dont have the necessary widgets in your production process, and all of them come from China, then your production line is likely to stop, said may, a global economist at the Oxford Institute of economics. These problems may arise around the world.