Why China's sneeze is giving the world economy chills

Could a single bat in central China make the global economy catch a cold? Call it an undead variation of the butterfly effect, but as the Wuhan coronavirus (which may have originated in bats) continues to spread, companies and consumers around the world are bracing for chills.

Why? Well, for one thing, China accounts for about a fifth of global economic output and it's number one in global trade. That means that any time the Chinese economy shudders or stumbles, the shockwaves circle the globe. And China is most certainly shuddering.


To slow the disease's advance, officials extended the traditional Chinese New Year holiday, and locked down cities that are home to more than 50 million people. In Wuhan itself, a major manufacturing and export hub, factories are shuttered for at least another week, and about a dozen other industrial regions have followed suit.

While China's own people are clearly bearing the brunt of the epidemic, here are three reasons why the outbreak, and the response to it, are also affecting the global economy:

China is a leading market for the world's largest consumer goods companies. But the quarantine and lockdown restrictions have forced many of those businesses to go dark in China for now. Apple, for example, has closed all its stores in China, its second largest market. Starbucks, similarly dependent, has closed half its shops in the country. China's oil imports, the largest in the world, are also reportedly taking a hit as the virus crimps travel and industrial production there. Dozens of air carriers, meanwhile, have cut service to China.

China is the world's largest exporter, and with many of the factories that do that exporting now closed, 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, have warned of "serious disruptions." This affects everything from your smartphone, to your vacuum cleaner to your (or your kids') video game consoles.

Markets get jittery. People who trade the stocks of all the companies affected by this are understandably jittery. US markets have taken a hit in recent days and China's main stock indices fell about 8 percent when they opened yesterday for the first time since the beginning of the Chinese New Year holiday.

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.

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A steady increase of violence in the Sahel region of Africa over the past eight years has imposed fear and hardship on millions of the people who live there. It has also pushed the governments of Sahel countries to work together to fight terrorists.

The region's troubles have also captured the attention of European leaders, who worry that if instability there continues, it could generate a movement of migrants that might well dwarf the EU refugee crisis of 2015-2016.

But is Europe helping to make things better?

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Donald J. Trump and CorOnaVirus decide to hit the road together across the USA. Will DJT and COV discover they are more alike than different? Will their interests diverge? #PUPPETREGIME

Jon Lieber, Managing Director for the United States at the Eurasia Group, shares his perspective on US politics.

Where are US-China relations in this battle over TikTok and what is happening?

Well, this may seem like a minor deal. It's a video sharing app that the president has given 45 days to sell to a US entity or get banned in the United States. But along with WeChat, these are two of China's most successful technology companies that the US has now banned from entry into the United States and potentially banned from being used on operating systems that rely on US software inside China. So, this is a huge escalation in the geotech war between the United States and China. China for a long time has not allowed Google and Facebook and other American applications to be fully operative inside their borders. And now the US is stepping up against Chinese technology companies. The reason is that there's concerns among the US government about these tech, these apps data security practices. Members of the military, high ranking government officials aren't allowed to have these on their phones because there's concern about what China does with the data that they can harvest from those phones. This is a real warning sign to other Chinese technology companies that they may not be welcome inside the American market unless they can prove in some way, they are totally independent from the Chinese government and the Chinese military. Expect a lot of escalation in this area over the coming months and years.

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In a new interview with Ian Bremmer for GZERO World, former CDC Director Dr. Tom Frieden says that the single most important step to reopening schools in the fall is to control infection in the community. But as of now, too many communities across the United States have lost control of the Covid-19 virus. Opening schools will only become a possibility once a majority of people start practicing the "Three 'W's" ("Wear a mask, wash your hands, watch your distance") and local and federal governments enforce stricter protective policies. The full episode of GZERO World begins airing on US public television on Friday, August 7, 2020. Check local listings.