When China Sneezes: Project Syndicate

Cases of the new coronavirus, confirmed in more than 30 countries, strikes when the global economy is already vulnerable and many countries struggle with debt, stagnant growth, reduced industrial output and job creation. COVID-19 has triggered an unexpected disruption to supply and demand. China is at the center of global value chains, explains Stephen S. Roach, an economist based at Yale University. ”Recent research shows that GVCs account for nearly 75% of growth in world trade, with China the most important source of this expansion,” he writes, adding that China is also “the largest source of external demand for most Asian economies.” He adds, “with China having accounted for fully 37% of the cumulative growth in world GDP since 2008 and no other economy stepping up to fill the void, the risk of outright global recession in the first half of 2020 seems like a distinct possibility.” Cases in China now exceed 80,000, though the pace of infection has slowed. Roach warns that the economic response will probably lag as central banks have few tools at their disposal with interest rates at low levels. – YaleGlobal

When China Sneezes: Project Syndicate

The COVID-19 outbreak has hit at a time of economic vulnerability; with some economies already struggling, the risk of global recession in 2020 is a possibility
Stephen S. Roach
Wednesday, February 26, 2020

Read the article from Project Syndicate about COVID-19’s disruption to the global economy.

Stephen S. Roach, a faculty member at Yale University and former Chairman of Morgan Stanley Asia, is the author of Unbalanced: The Codependency of America and China.

Confirmed cases by region/country                     	China’s rank for exports/imports                                                        Asia China	77,754	 South Korea	977	1/1 Japan	160	1/1 Singapore	90	2/1 Thailand	37	1/1 Taiwan	30	1/1 Malaysia	22	1/1 Australia	22	1/1 Vietnam	16	2/1 Philippines	3	1/1 India	3	3/- Cambodia	1	-/1 Sri Lanka	1	-/2 Nepal	1	-/2 Afghanistan	1	-/5 Americas US	53	3/1 Canada	10	2/2 Europe	 Italy	272	-/3 Germany	16	3/1 UK	13	5/2 France	12	-/2 Spain	3	-/3 Russia	2	1/1 Belgium	1	-/- Finland	1	5/3 Sweden	1	-/- Middle East/Africa Iran	61	1/1 UAE	13	3/1 Bahrain	8	-/1 Kuwait	8	2/1 Iraq	6	1/2 Oman	2	1/4 Israel	2	2/2 Egypt	1	-/1 Lebanon	1	-/1

Viral: COVID-19 has spread from China to more than 30 nations, many of which rely on China as among their top five trade partners for imports, exports or both (Source: Pharmaceutical Technology and the Observatory of Ecomomic Complexity)

Read a report from the US-China Economic and Security Review Commission about growing reliance on China for medicines and pharmaceutical products.

China as Source of US Drugs	 	 Heparin	40% Penicillin	45% Acetaminophen	70% Antibiotics	80% Hydrocortisone	91% Ibuprofen	95%

(Source: Politico and US Department of Commerce)

© Project Syndicate - 2020