Options Wonderland

[3xBuBu]

China’s next coronavirus crisis: What happens after a country closes its economy

https://fortune.com/2020/04/20/coronavirus-reopening-the-economy-china-covid-19/

China has become the world’s pioneer on coronavirus response—a mantle assumed out of necessity. The first to encounter the COVID-19 virus in its industrial hub of Wuhan, China enacted mass lockdowns and managed to contain the outbreak. As the virus spreads across the globe, governments elsewhere are mimicking the tactic, forcing large swaths of the world’s population into inactivity, isolation, and even quarantine. But mandatory social distancing comes with a price, and Beijing’s response to the economic fallout is so far less instructional.

China’s economy endured a one-two punch under lockdown. With workers and consumers told to stay home, both consumption and production plummeted. The trade­off was a peak and steady drop-off of coronavirus cases; the vast majority of the 83,000 people infected have recovered, according to China’s count. But when data quantifying the economic fallout started rolling in, it was undeniably bleak.

“This is hands-down the absolute worst result we’ve ever recorded,” said ­Shehzad Qazi, managing director at China Beige Book (CBB). The consultancy surveys over 3,300 Chinese companies to gauge the strength of the world’s second-largest economy, and in the first three months of this year, all of its headline metrics—from revenue to profits—sank into contraction territory, a result never seen in its decade of tracking.