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Slowed by the Coronavirus, China Inc. Struggles to Reopen
Some factories are firing up again, but with many workers quarantined and parts in short supply, production is limited.
Airbus is slowly restarting its assembly line in China. General Motors began limited production on Saturday. Toyota followed on Monday morning.
Fitfully and painfully — and with some worried prodding from Beijing — China is trying to reopen for business.
The world’s second-largest economy practically shut down three weeks ago as a viral outbreak sickened tens of thousands of people, unexpectedly lengthening a Chinese holiday. The freeze set off warnings that the global economy could be in jeopardy if the world’s pre-eminent manufacturing powerhouse stayed shut for long.
Now, as some factories rumble back into action, the monumental task of restarting China is becoming clear. China’s efforts to contain the virus are clashing with its push to get the country back to work, requiring the country’s leaders to strike a balance between keeping people safe and getting vital industries back on track.
Chinese leaders called this past week for more emphasis on reviving the economy. But many of the factories that have reopened are operating well below capacity, say companies and experts. Quarantines, blocked roads and checkpoints are stopping millions of workers from returning to their jobs. Supply lines have been severed.
Even to start up again, Chinese officials are requiring businesses to provide masks to workers, record their temperatures and track their movements to make sure they haven’t come into contact with the coronavirus, named COVID-19.
“The kind of fear and freeze that has taken hold in terms of economic activity is likely to persist,” said George Magnus, a research associate at Oxford University’s China Center. “I don’t really see a good outcome.”
By Monday, more than 70,000 people had been infected by the coronavirus and over 1,700 had died worldwide, according to officials. New infections continue to be confirmed around the world, including an American who was identified with the disease in Malaysia on Sunday who had been on a cruise ship, raising concerns about another potential cluster outside mainland China.
Also on Sunday, Taiwan said that a 61-year-old man who had a history of poor health but not known for travel to China had died of the coronavirus, making him the fifth fatality outside the mainland.
Still, the pace of new cases officially confirmed in mainland China, the center of the outbreak, has slowed over the past three days.
The ripples have continued to spread around the world. Prime Minister Lee Hsien Loong of Singapore warned on Friday that the city-state could fall into recession as a result of the outbreak. Germany, Europe’s business powerhouse, on Friday reported slowing economic growth at the end of 2019, prompting fears the virus could delay a recovery.
As the new week begins, China’s mighty manufacturing machine — which accounts for a quarter of the world’s manufacturing output — showed glimmers of revving up again.
Airbus, the European aircraft maker, said that it began to reopen its narrow-body jet assembly operations last week in Tianjin but that it would only “gradually increase production, whilst implementing all required health and safety measures.” Airbus needs the production: It acknowledged on Thursday that it could not meet global demand for narrow-body jets, which airlines are clamoring for after the grounding of Boeing’s 737 Max jet. The Tianjin plant has a targeted production rate of six jets per month.
Volkswagen said that it partially restarted one of its 15 assembly plants in China on Thursday and that it planned to reopen the rest gradually. G.M. said that it had begun a gradual process on Saturday to reopen its more than a dozen assembly plants in China. Hyundai said it restarted most Chinese production on Monday.
Others were more circumspect. Caterpillar, the heavy equipment company, said it reopened most plants in China last Monday at the request of the government authorities, but did not offer details, like whether production had resumed. Honda said it was trying to restart production on Feb. 24.
With the exception of factories producing medical protective equipment, which the Chinese government has asked to run around the clock, few businesses seem to be returning yet to their previous pace.
Toyota said that its four assembly plants had operated on two work shifts a day before the virus spread. But it planned to reopen three of them on Monday and Tuesday with just one shift and leave closed for now the fourth and smallest, in the western Chinese city of Chengdu.
Foxconn, the Taiwan company that makes iPhones and other gadgets on behalf of Apple and global electronics companies, declined to detail which plants have reopened since the Chinese holiday ended but denied a media report that it was aiming to reach 50 percent production levels by the end of this month. It did not respond to requests for additional comment. Apple also declined to comment, but its chief executive, Timothy D. Cook, said last month, without offering specifics, that some of its suppliers could be disrupted.
China’s consumer electronics components factories slowly reopened through last week, and by Monday practically all had reopened except those in Wuhan, at the center of the epidemic, said Anna-Katrina Shedletsky, the chief executive of Instrumental, a remote quality monitoring system used by global brands to track and manage electronics manufacturing. She added, however, that many of these factories were not at full production.
The American Chamber of Commerce in Shanghai, which has members across much of the industrial heartland in east-central China, said that the majority of its members had restarted at least some operations. But the bulk of these members are not at full production, mainly for lack of workers, said Ker Gibbs, the chamber’s president.
The reopening of businesses means trying to bring together again much of China’s 700 million-strong labor force after what had become a nearly three-week national holiday. China’s containment efforts have effectively carved up the country. At least 760 million people — slightly over half the country’s population — are under various kinds of lockdown.
The authorities have begun trying to reconnect the country. China’s agriculture ministry demanded over the weekend the removal of road and highway blockages in rural areas that have prevented the movement of livestock and animal feed. The southern province of Jiangxi announced last Thursday that it would dismantle checkpoints at highway entrances and exits.
But many obstacles remain.
“I know the virus is serious. I can understand that this is a disaster for the country,” said Ma Hongkui, a truck driver from northwestern China who has been stranded for weeks with dozens of other truckers in a small town in the southwestern province of Yunnan for lack of cargo. “I don’t know whom to ask for help.”
In the city of Yiwu, a hub for small manufacturers in Zhejiang province and home to a sprawling wholesale merchandise market, migrant workers returning to jobs have to submit to a two-week quarantine. When they arrive at a train station in Yiwu, they are examined by dozens of officials in makeshift hazmat suits with thermal cameras. The local government has arranged 40,000 beds to accommodate them.
Only those registered with an official list of companies and work units will be allowed to enter the city, according to a statement from the government last week. Lying would be punished with arrest.
Shanghai is gathering data from employers on each worker’s date of return and travel history, said Zhu Zongyao, the director of the city’s Big Data Center. The city’s computers will automatically assess and rate the riskiness of each worker’s recent travels in terms of possible exposure to the virus.
China is “maintaining the balance of safety for the population while at the same time getting people back to work as soon as possible,” said Michael D. Crotty, the co-owner of a curtain factory in Jiangsu Province that is preparing to reopen on Monday.
The local authorities required Mr. Crotty’s factory to obtain a 10-day supply of face masks for every worker. But suppliers in China have been giving priority to health workers and others with urgent needs. Mr. Crotty quickly arranged to import masks from all over the world.
Requiring masks is more than onerous, said Peter Piot, the director of the London School of Hygiene and Tropical Medicine. It could also aggravate a global shortage of masks.
“At a time when there is such a shortage of face masks, you’ve got to have a rational way of using them,” he said.
The slow and partial reopening of factories could have a knock-on effect on businesses around the world. China Weaving Materials in Jiangxi Province said that its yarn factories would not open until Feb. 20. Other companies in China need the yarn to make fabric.
In neighboring Vietnam, handbag factories are running short on fabric, zippers and various metal components that come mostly from China, said Tatiana Olchanetzky, a handbag manufacturing consultant in that country.
“Some vendors might have to make workers take unpaid leave in March if materials are not arriving,” she said.
Restarting China’s factories is only part of the challenge. The country has a huge services and consumer sector, including shops and restaurants enjoyed by an increasingly affluent middle class. Those businesses have also been devastated by the outbreak, which has kept many Chinese families confined to their homes.
Amy Li, the owner of a Shanghai restaurant that specializes in northeastern Chinese cuisine, said that her eatery had little hope of reopening soon, like dozens of others nearby, and may not survive.
“We don’t know when we can reopen,” Ms. Li said. “The future is a matter of fate.”
Paul Mozur and Raymond Zhong contributed reporting. Hisako Ueno and Cao Li contributed research.
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