Sichuan, China: Fighting a war on two fronts is never easy. But that is the situation facing China‘s government: It is trying to contain the country’s worst viral epidemic in 17 years, while also attempting to prevent its enormous economy from suffering a painful slowdown.
Meanwhile, hundreds of millions of workers want to return to their factories and offices – many of which stay shut following an extended Lunar New Year holiday – so that they can protect their livelihoods. But they remain stuck in far-away regions with transport links hobbled.
The coronavirus outbreak that has now killed more than 1,000 people over the past month continues to spread, infecting people not just in China but in many neighbouring countries too. And allowing workers to return could help it spread even faster.
“I just got updated by my company and we won’t go back to work until around March 1,” said Xin, a purchasing manager at a company that produces pipeline materials in Zhaoqing in China’s southern industrial powerhouse region. Like many others, he declined to give his full name for fear of reprisals.
“But what the staff are concerned and worried about now is salary,” he told Al Jazeera. “We will be paid (during the downtime), but it will only be at the very basic salary level.”
Recent media reports suggest that Chinese President Xi Jinping is concerned that overly restrictive measures to contain the virus, including curbs on road, rail and air travel, are hurting the world’s second-largest economy.
Managing expectations
At least two economists at government-linked think-tanks have projected a loss of up to one percentage point from China’s growth rate in the first quarter of 2020 and even for the full year, a potentially troubling development for an economy that was already slowing down.
Chinese President Xi Jinping has expressed concern that measures to curb the outbreak are hurting economic growth [File: Pang Xinglei/Xinhua via The Associated Press]
China’s economy grew by 6.1 percent over the whole of 2019, its slowest expansion since 1990. For the fourth quarter, gross domestic product (GDP) grew by 6.0 percent compared with the same period a year earlier.
Some private forecasters have even more dire predictions. United States-based lender Citi is now forecasting growth of just 3.6 percent in the first quarter.
But officials at provincial and district levels are also tasked with keeping the numbers of infections down to a minimum, and imposing curbs on places where people come into close contact with each other, such as the transport network and workplaces, is the most effective way of ensuring that. And those restrictions are hurting some of China’s most economically productive regions.
While that situation persists, global supply chains of everything from eyeglasses to cars, chemicals, batteries and electronic components remain crippled.
“The instructions that we know Xi Jinping issued, are in a way in deep contradiction with each other,” Victor Shih, associate professor of political economy at the University of California San Diego, told Al Jazeera by phone.
“If the authorities are really doing everything possible they can to prevent new cases, then they would have very stringent measures to prevent migrant workers coming back in,” Shih said. “But that, of course, will hamper economic activity.”
Locked in
Fear, uncertainty and government measures are keeping many of the nearly 300 million migrant labour workforce in place in their hometowns and villages, where they travelled to before the Lunar New Year holiday, which was originally scheduled to last from January 24-30.
Some migrant workers say they are genuinely afraid of contracting the virus and so do not mind staying in their hometowns. They are unsure whether they will be able to get access to healthcare if they fall sick.
That suits local governments that are trying to contain the rapid spread of the COVID-19 virus.
Migrant workers in China are having trouble returning to work in large cities as transport remains restricted [File: Qilai Shen/Bloomberg]
They are barring many workers from returning to large manufacturing regions such as China’s Greater Bay Area in southern Guangdong province. Many of the cheaper forms of transport such as slow trains and long-haul buses that usually bring workers back after the Lunar New Year holiday remain restricted by authorities.
And a system of internal travel and residency permits also ensures that migrant workers stay put. Village committees are reluctant to issue permits for people to leave, while restrictions in cities near important factories block those without local residence permits, social insurance and long-term accommodation from entering.
“The restriction of labour movement will hurt auto manufacturing in Hubei province and heavy manufacturing industries in provinces such as Shandong, Jiangsu, Zhejiang, Fujian, Anhui and Guangdong,” Le Xu, a senior research analyst with Wood Mackenzie said in a note released late on Wednesday.
Those restrictions are already known to be impacting some economically important manufacturers. Foxconn, the world’s largest contract electronics manufacturer and a key supplier for Apple’s iPhones denied media reports that it plans to resume operations by the end of February.
“The welfare of our employees continues to be a top priority for Foxconn,” the company formally known as Hon Hai Precision, said in a statement on February 8. “We are also working with the local governments to facilitate the necessary preparations for our employees to safely return to work. The operation schedules for our facilities in China follow the recommendations of the local governments, and we have not received any requests from our customers on the need to resume production earlier.”
Operating on the edge
Analysts say an even bigger issue is that thousands of small- and medium-sized factories, assembly plants and facilitators of global supply chains in those key manufacturing areas remain out of action.
“A lot of these smaller companies are already operating on very thin margins and many of them have taken on a lot of debt,” Shih said. “So even a few weeks of not having any business, not having any cash flows will potentially bankrupt these companies. This is why they don’t pay their workers because they literally don’t have the money.”
Employees in China have been encouraged to work from home as the virus spreads [File: Qilai Shen/Bloomberg]
Many such plants either remain shuttered or are only slowly cranking up their activities.
A marketing and sales worker at a Dongguan-based company that produces candies and snacks told Al Jazeera that office staff like her have been encouraged to work from home and will likely return to the office next week.
Production restarted at the facility on February 10, though its migrant workers have been slow in returning, and the company has yet to release a policy concerning returning workers, said Chen, who also declined to allow the use of her full name or her company’s name.
“At present, most of our workshops have been running at 30 percent capacity, but that number may go up to 50 percent after this week,” she said.
It is a similar story across the Greater Bay Area.
“We’re only at 40-percent capacity,” Lin, a manager at a key packaging materials company in Shenzhen, told Al Jazeera. “Since some areas are still locked down, it is hard for people to get back.”
‘Collective action’
Even if the virus outbreak clears up within the three-month period during which authorities in Beijing are providing assistance to companies – such as tax breaks and other stimulus measures – the economic problems could persist for longer, analysts say.
Many workers may not be paid, get laid off or lose holiday time even if they work from home.
Factories are slowly resuming operations in China’s largest manufacturing cities, but workers may bear the costs of prolonged closures [File: Qilai Shen/Bloomberg]
“The authorities are already trying to find a way to resolve those kinds of arbitration issues with employees, and kind of fast track [how to deal with] that possibility,” Geoffrey Crothall, director of communications at China Labour Bulletin, a non-governmental organisation that monitors labour issues in mainland China, told Al Jazeera by phone.
“There’s also a likelihood that workers that are let off without pay will eventually start taking collective action again,” Crothall said. “I think when things settle down, if people are owed three or four months wages, or if a company is not paying their social insurance or pension contributions, I’m sure you’ll see more protests related to that.”
Diversify to survive
While global companies with international supply chains can do little to escape the short-term disruptions to their China operations, the long-term message to them is clear, says the University of California’s Shih: Diversify.
“This is yet another reason for a lot of foreign companies, especially those based in North America and Europe, to really try to diversify their supply chains,” Shih said.
“With global warming and with the advent of cheap airline and transportation infrastructure, you will have the potential for pandemics breaking out, not just in China, but other developing and maybe even advanced countries,” he said. “So the more diversified a company’s production chain is, the better they are able to weather these different shocks.”
Multinational companies with operations in China will have to rethink their supply chains in the midst of virus outbreak [File: Liang Xiaopeng/Xinhua via The Associated Press]
But the prevailing sentiment among the business community right now is the thing they hate the most: Uncertainty.
While it is tempting to compare the current outbreak to the severe acute respiratory syndrome (SARS) epidemic of 2002-2003 – from which the Chinese economy rebounded fairly sharply – the biology of the COVID-19 virus could take the country along a different trajectory.
“It is really too early to tell how things will pan out the next few weeks,” Harley Seyedin, President of the American Chamber of Commerce in South China told Al Jazeera. “If SARS was to be used as a gauge, I expect the virus to work its way out as the weather gets warmer.”
“However, travel will remain at minimum levels based on necessity,” Seyedin said. “Factory work continued during SARS and I expect that things will be back to full speed in a month or so as a backlog will continue to be created by the extended holiday and lack of availability of transport for workers to return. This is all, of course, if the virus does not suddenly surge beyond expectations.”
Additional research and reporting assistance provided by Jonathan Zhong.
OTTAWA – Canada’s unemployment rate held steady at 6.5 per cent last month as hiring remained weak across the economy.
Statistics Canada’s labour force survey on Friday said employment rose by a modest 15,000 jobs in October.
Business, building and support services saw the largest gain in employment.
Meanwhile, finance, insurance, real estate, rental and leasing experienced the largest decline.
Many economists see weakness in the job market continuing in the short term, before the Bank of Canada’s interest rate cuts spark a rebound in economic growth next year.
Despite ongoing softness in the labour market, however, strong wage growth has raged on in Canada. Average hourly wages in October grew 4.9 per cent from a year ago, reaching $35.76.
Friday’s report also shed some light on the financial health of households.
According to the agency, 28.8 per cent of Canadians aged 15 or older were living in a household that had difficulty meeting financial needs – like food and housing – in the previous four weeks.
That was down from 33.1 per cent in October 2023 and 35.5 per cent in October 2022, but still above the 20.4 per cent figure recorded in October 2020.
People living in a rented home were more likely to report difficulty meeting financial needs, with nearly four in 10 reporting that was the case.
That compares with just under a quarter of those living in an owned home by a household member.
Immigrants were also more likely to report facing financial strain last month, with about four out of 10 immigrants who landed in the last year doing so.
That compares with about three in 10 more established immigrants and one in four of people born in Canada.
This report by The Canadian Press was first published Nov. 8, 2024.
The Canadian Institute for Health Information says health-care spending in Canada is projected to reach a new high in 2024.
The annual report released Thursday says total health spending is expected to hit $372 billion, or $9,054 per Canadian.
CIHI’s national analysis predicts expenditures will rise by 5.7 per cent in 2024, compared to 4.5 per cent in 2023 and 1.7 per cent in 2022.
This year’s health spending is estimated to represent 12.4 per cent of Canada’s gross domestic product. Excluding two years of the pandemic, it would be the highest ratio in the country’s history.
While it’s not unusual for health expenditures to outpace economic growth, the report says this could be the case for the next several years due to Canada’s growing population and its aging demographic.
Canada’s per capita spending on health care in 2022 was among the highest in the world, but still less than countries such as the United States and Sweden.
The report notes that the Canadian dental and pharmacare plans could push health-care spending even further as more people who previously couldn’t afford these services start using them.
This report by The Canadian Press was first published Nov. 7, 2024.
Canadian Press health coverage receives support through a partnership with the Canadian Medical Association. CP is solely responsible for this content.
As Canadians wake up to news that Donald Trump will return to the White House, the president-elect’s protectionist stance is casting a spotlight on what effect his second term will have on Canada-U.S. economic ties.
Some Canadian business leaders have expressed worry over Trump’s promise to introduce a universal 10 per cent tariff on all American imports.
A Canadian Chamber of Commerce report released last month suggested those tariffs would shrink the Canadian economy, resulting in around $30 billion per year in economic costs.
More than 77 per cent of Canadian exports go to the U.S.
Canada’s manufacturing sector faces the biggest risk should Trump push forward on imposing broad tariffs, said Canadian Manufacturers and Exporters president and CEO Dennis Darby. He said the sector is the “most trade-exposed” within Canada.
“It’s in the U.S.’s best interest, it’s in our best interest, but most importantly for consumers across North America, that we’re able to trade goods, materials, ingredients, as we have under the trade agreements,” Darby said in an interview.
“It’s a more complex or complicated outcome than it would have been with the Democrats, but we’ve had to deal with this before and we’re going to do our best to deal with it again.”
American economists have also warned Trump’s plan could cause inflation and possibly a recession, which could have ripple effects in Canada.
It’s consumers who will ultimately feel the burden of any inflationary effect caused by broad tariffs, said Darby.
“A tariff tends to raise costs, and it ultimately raises prices, so that’s something that we have to be prepared for,” he said.
“It could tilt production mandates. A tariff makes goods more expensive, but on the same token, it also will make inputs for the U.S. more expensive.”
A report last month by TD economist Marc Ercolao said research shows a full-scale implementation of Trump’s tariff plan could lead to a near-five per cent reduction in Canadian export volumes to the U.S. by early-2027, relative to current baseline forecasts.
Retaliation by Canada would also increase costs for domestic producers, and push import volumes lower in the process.
“Slowing import activity mitigates some of the negative net trade impact on total GDP enough to avoid a technical recession, but still produces a period of extended stagnation through 2025 and 2026,” Ercolao said.
Since the Canada-United States-Mexico Agreement came into effect in 2020, trade between Canada and the U.S. has surged by 46 per cent, according to the Toronto Region Board of Trade.
With that deal is up for review in 2026, Canadian Chamber of Commerce president and CEO Candace Laing said the Canadian government “must collaborate effectively with the Trump administration to preserve and strengthen our bilateral economic partnership.”
“With an impressive $3.6 billion in daily trade, Canada and the United States are each other’s closest international partners. The secure and efficient flow of goods and people across our border … remains essential for the economies of both countries,” she said in a statement.
“By resisting tariffs and trade barriers that will only raise prices and hurt consumers in both countries, Canada and the United States can strengthen resilient cross-border supply chains that enhance our shared economic security.”
This report by The Canadian Press was first published Nov. 6, 2024.
