How the coronavirus hits the world economy

How the coronavirus hits the world economy

A few weeks ago we first took a look at how a bat (possible origin of the coronavirus) could have a butterfly effect on the world economy.

China accounts for about a fifth of global economic output, a third of global oil imports, and the largest share of global exports. That means that any time the Chinese economy shudders or stumbles, the shockwaves circle the globe. And China is most certainly shuddering.


So far, the country has seen more than 70,000 cases of coronavirus, with close to 2,000 deaths. Some 720 million people there are on residential lockdowns to stop its spread. That means people aren't out buying things or producing things in factories and offices.

This matters because:

China is a leading market for the world's largest consumer goods companies. The quarantine and lockdown restrictions have forced many of those businesses to go dark in China for now. Apple, for example, earlier this month closed all its stores in China, its second largest market. Starbucks, similarly dependent, has closed half its shops in the country. Estee Lauder's numbers are getting smudged and Haagen-Dazs sales are melting. Here's a look at what a few dozen of the world's leading consumer and services companies are saying.

China's oil imports, the largest in the world, are taking a hit as the virus crimps travel and industrial production there, knocking down China's oil purchases by several hundred thousand barrels per day. This is bad news for countries that depend on oil exports, like Nigeria, Africa's largest producer, where growth forecasts are already being trimmed.

China is the world's largest exporter, and with many of the country's major factories partly or totally shuttered, global businesses that rely on parts and labor in China are scrambling to figure out alternatives. DHL, who know a thing or two about supply chains, warned earlier this month of "serious disruptions." More than 30 scheduled shipping services from China to Europe and the US have been cancelled. This affects everything from your smartphone, to your vacuum cleaner to your (or your kids') video game consoles. The resourceful folks of Jaguar Land Rover say they are getting critical parts out of China in suitcases.

The good news is, after it gets worse, it generally gets better – when China's stores, factories, and travel links reopen, there will likely be a mini boom as everyone gets back to shopping and working and exporting. The bad news is: we still don't know when that might be, and with the number of cases still rising, it could be a while.

A sector that's rapidly expanding, domotics - domus (home) plus robotics - are smart houses that manage temperature and lighting to minimize wasted electricity. For example, smart thermostats sense your presence and set the temperature according to your needs, saving 20% a year on heating bills. Watch this episode of Eni's Energy Shot series to learn how domotics save money and increase a home's value.

Even if the US, Europe, China, and India reduce carbon emissions at the rate they've promised, much climate damage has already been done. That shouldn't stop these and other countries from doing all they can to meet their net-zero emissions targets, but they also better start preparing for a world of people on the move.

Climate change will displace an unprecedented number of people in coming years, creating not just a series of humanitarian crises in many parts of the world, but lasting political, economic, and social upheaval as those of us who live on higher ground try to find a sustainable place for these climate refugees to live.

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Listen: In a wide-ranging interview with Ian Bremmer, Pulitzer Prize-winning climate journalist Elizabeth Kolbert assesses the current state of the climate crisis and answers a simple question: how screwed are we? And as the climate continues to warm at a record pace, she unpacks some of the more extreme climate solutions that some increasingly desperate nations are starting to consider. Such measures may sound like stuff of science fiction (see: injecting sulfur particles into the atmosphere or shooting millions of tiny orbital mirrors into outer space) as times become more desperate, their appeal is growing. Can we fix the planet the same way we broke it?

China is making its neighbors nervous these days. Chinese fighter jets are screaming into Taiwan's airspace. Hundreds of armed Chinese "fishing boats" are plying the disputed waters of the South China Sea. And Beijing is slashing imports from some trading partners because of disputes over political issues.

To push back against this increasingly aggressive behavior, regional powers Japan, India, and Australia, together with the US, are boosting cooperation via a 17-year-old grouping called the Quadrilateral Security Dialogue, or simply "The Quad." But how effectively can these four countries really work together to counter China? Eurasia Group's Peter Mumford discusses the Quad's future.

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Want to tackle climate change? If so you'll have to reach out to China, which is currently responsible for over a quarter of global carbon dioxide emissions. Beijing will certainly take your call, as climate is a huge priority for President Xi Jinping.

Xi has promised that China will go "net zero" — meaning its carbon emissions will be offset by equal amounts of either natural or tech-driven carbon capture — by 2060. Is a decade later than most of the top 10 polluting countries fast enough for the rest of the world? It is for the Chinese, who want to help but have their own ideas about how.

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When will it be safe for the world's children to be vaccinated against COVID-19? The World Health Organization's chief scientist, Dr. Soumya Swaminathan, says that vaccines are being tested in children down to the age of six or even lower, and promises that data on children will be shared as soon as it's available. She also notes that there are not enough studies on transmission in schools, and the WHO has advised governments to prioritize schools "over other things like shopping malls or cinema halls or pubs." Dr. Swaminathan spoke with Ian Bremmer in an interview on GZERO World, airing on US public television stations starting April 9. Check local listings.

Watch the episode: Vaccine nationalism could prolong the pandemic

Over the past half century, climate change has had an immense impact on the farmers who produce the food we eat. A new study by Cornell University shows that global warming has knocked 21 percent off of global agriculture productivity growth since 1965, equivalent to seven years of normal growth if humans had not polluted the planet. But not all countries have been affected in the same say. Farmers in warmer parts of the world have been hit hard as conditions grow more arid, but sub-polar regions in Canada or Siberia are now actually better for agriculture because they are not as cold as they used to be. Here we take a look at how climate has affected farming productivity growth around the world.

On Tuesday, a major US intelligence report said the top threat to America right now is China. A day later, John Kerry, the Biden administration's "climate czar," got on a plane to... China.

Such is the drama of ties between the world's two largest economies these days.

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Can "the Quad" constrain China?

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