Economy or Epidemic... China's Dilemma Ahead of Resuming Operations

[Asia Economy Beijing=Special Correspondent Sunmi Park] Economic activities in China, which had been virtually at a 'full stop' due to the spread of the novel coronavirus infection, are scheduled to resume from the 10th. While controlling population movement is crucial to prevent the spread of the epidemic, the final wave of Chinese people returning to their daily lives is expected to continue this weekend, deepening the dilemma for the Chinese leadership to catch both the 'two rabbits' of economic recovery and epidemic prevention.

According to announcements from local Chinese governments on the 7th, companies can mostly resume factory operations from the 10th, which had been halted due to the government's decision to extend the Spring Festival (Chinese New Year) holiday. On the 10th, it will be legally possible to resume factory operations in 21 provinces, cities, and autonomous regions, including Shanghai, Chongqing, Shandong Province, Zhejiang Province, and Guangdong Province. Hubei Province, which includes Wuhan City, the epicenter of the novel coronavirus outbreak, will allow resumption from the 14th; the Shihezi area in Xinjiang Autonomous Region from the 15th; and Wenzhou City in Zhejiang Province from the 17th. Some regions, including Beijing, which left the decision to resume operations to the discretion of companies, have already resumed operations since the 3rd, but in fact, most companies and factories across China have not been operating normally until the 9th.

The top Chinese leadership is caught in a dilemma between the economy and the epidemic. The epidemic has not calmed down, with 31,161 confirmed cases and 636 deaths nationwide as of midnight on the 7th, two months after the outbreak. With companies and factories massively resuming operations from the 10th, there could be concentrated movement of Chinese people returning to daily life this weekend. The Chinese government, which has expanded full city lockdown measures not only in Wuhan City but also to other cities in Hubei Province and neighboring Zhejiang Province, and is implementing strong policies such as 'restrictions on going out' to suppress population movement throughout cities, inevitably faces a heavy burden.

Chinese railway authorities expect that between the 8th and 11th, an average of 2 to 3 million people per day will use railways to travel between regions. Due to the staggered end of the Spring Festival holiday caused by the novel coronavirus outbreak, this is only about 25% of the number of railway passengers recorded during previous Spring Festival holidays, but the fact that many people are still moving amid uncontrolled spread of the novel coronavirus is a source of tension for the Chinese leadership.

To prevent cluster infections, railway authorities announced that during this period, disinfection inside trains will be strengthened, and the number of seats available for sale will be reduced to half of the usual, allowing passengers to sit apart from each other. Chinese aviation authorities also reduced the number of domestic flights by half and filled only up to 45% of seats.

The Chinese government's decision to declare the end of the Spring Festival holiday and allow resumption of operations by region, despite the risk of spreading the novel coronavirus due to population movement, was driven by the judgment that the halted economy and disrupted supply of goods must be resolved quickly. Currently, most factories except for some items such as food, medicine, and daily necessities have stopped operating, resulting in disrupted supply of goods across regions.

Additionally, China is facing an economic crisis situation where, after barely maintaining a growth rate in the 6% range last year due to the trade war, it now faces economic forecasts that the growth rate could fall to the 4% range in the first quarter of this year.

Lu Zhengwei, an economist at Shanghai Xingye Bank, diagnosed that "small and medium-sized enterprises in China can only endure the current situation (where the economy has stopped) for about a month," explaining that the resumption of operations by companies and factories is an unavoidable choice for sustaining China's economic growth and supplying goods to manage the novel coronavirus situation. The Hong Kong South China Morning Post (SCMP) described China's current situation ahead of the resumption of operations as "caught in a dilemma of having to start work again amid the fear of the novel coronavirus outbreak."

This content was produced with the assistance of AI translation services.