Eventually the Coronavirus outbreak will have an enormous impact on consumption and investment behavior that will change the costs and risks of doing business. It will dramatically change the equilbrium consequences of the world economy that may destroy consumer confidence. This itself would outpace the excess estimate of the disease itself. Indeed, the coronavirus is having a huge effect on China's economy. Needless to say, the global economic burden from the virus will be very substantial.
Initially, the impact of the virus primarily effects travel, leisure, and commercial activity. However, as the virus drags on, foreign investments will further curtail with the perception of how the virus is handled globally. Some would argue that once the virus is contained, the reduction of consumption will kick in and recover rapidly. Unfortunately, this is speculative because due to the psychological impact.
For example, China's workforce is not going to make up for absentism in work through longer hours. The real damage will be felt in China's traditional economic avenues that will usher a supply shock in their manufacturing base. With over 75,000 people infected, China feels pressure to contain the outbreak on a disproportionate scale which is why Foxconn, the manufacturers of Apple's products, are asking the government to resume economic activity even if the virus spreads.
The real problem with the coronavirus is that it has a habit of spreading from person to person with ease. It is also believed to have resiliency to survive outside of the human body for hours. Infectious diseases and viruses have no borders and changing weather patterns aren't the only reason why animal-to-human transmissions have increased. Anything that involves humans getting closer to animals increasingly puts humans at risk. When you're dealing with traditional Asian markets, crates of animals are bundled together in small spaces where viruses spread rapidly through bacterial matter in feces. Unfortunately, mass quantities of manure can seep into the water system and food supply.
China's healthcare and infrastructure possesses an inability to address future outbreaks. China's initial response was to withhold information from the public and take little action in containing the virus. China was sharing next-to-no information and didn't feel accountable for reporting the virus until it became uncontrollable. China has a lot of pride with respect to their economic successes, especially with their One Belt One Road economic initiative that was formulated to cement their dominance in the Asia Pacific region and over the American Dollar. China felt that it can not show social economic instability for this becomes a failure in their grand desire to dominate trade in the Asia Pacific region.
Since China is heavily populated and dense, the coronavirus is restricting labor mobility of people from moving to regions that are more productive. If the virus becomes an epidemic in the future and mutates towards the younger population, then health care expenditures will severely impact the GDP of infected economies in Asia. What's happening in China produces a rippling global effect because China has been at the epicenter for foreign investment. With these types of outbreaks, the effects are also transmitted to other Asian countries competing with China's foreign direct investments. The global costs of the coronavirus can become enormous if the virus is found to be transmitted through other channels such as international cargo.
The problem of the virus is that there are no recognizable victories or defeats that keep on a comin'. By adding infectious disease as a security agenda item, it will strengthen global corporations in the future by minimizing economic shocks and disruptions. In China, the media can be manipulated by the state consequently risking the lives of its citizens. However, the true economic impact is the perceived life threat and emotional support of China's workforce. The economic impact stemming from travel bans will lead to change avoidance and contact patterns at individual and community levels. Even the corporate transmission and the subsequent closure of multitudes of companies will have a drastic effect on shareholder value of companies like McDonald's, Starbucks, Exxon, and so forth.
I really think the problem is China's organizational use of personnel favours bribes to a desired outcome of boosting their growth domestic product. For example if the coronavirus has a significant impact on travel, it will have a significant impact on cargo. China is worried about foreign investment and their One Belt One Road initiative.
Foreign investment may want a premium on their capital if China continues to establish outbreaks of epidemic scale.
China is now up-in-arms with certain nations trying to de-fame China. The US Department of Commerce Secretary, Wilbur Ross, stated that the coronavirus is a "positive" for the American economy. Perhaps Wilbur Ross believes that with China's vast population of humans living in close proximities, the large consumption of swine, poultry, and exotic animals, has produced epidemics historically and will likely to continue this trend in the future.
The Chinese media knows that this is taking a toll on its population that is forcing a variety of hardships, fear, and being shunned out of its economic progress to dominate the United States. As a result, China's attempts to minimize their risks of being targeted are done by reducing travel, spending less money, and preventing themselves from exhibiting any illness.
Chinese State media reported, ""Dear residents, please cooperate with the work of the community during the epidemic. If the community staff makes a phone call to you, please cooperate with us and inform us of the number of members in your family and their current physical condition. If you have a fever patient at home, please report to the community as soon as possible."
What this shows is China's drive in containing the virus. However, I really think that Chinese citizens feel betrayed by their own government. That in itself exponentially drives foreign investment away and pushes American dominance further in the Asia Pacific region and the almighty US Dollar.