Chinese virus will afflict ailing globalisation

Yangtze Optical Fibre and Cable Joint Stock Co

31/01/2020 02:26

(The author is a Reuters Breakingviews columnist.  The opinions
expressed are her own.)
    By Una Galani
    MUMBAI, Jan 31 (Reuters Breakingviews) - More walls are
going up. Trade wars, technology protectionism and Brexit-type
barriers have knocked worldwide integration over the last few
years. As the coronavirus from China spreads, it will give
countries and companies fresh reasons to rethink the merits of
cross-border commerce and supply chains.  
    Restricting movement may help contain the virus that had
killed 213 people as of Friday, infected nearly 10,000 and led
the World Health Organization to declare a global health
emergency. With Chinese people expected to take over 160 million
trips abroad this year, it’s no wonder that other regions are
strictly curbing inbound visitors from the People’s Republic.
The likes of HSBC  HSBA.L   0005.HK  and LG Electronics
 066570.HK  are also clamping down, banning travel to China.
British Airways is one airline suspending flights to and from
the country. 
    Such preventative measures have the added effect of stoking
fear and distrust of “others”. Like the trade tensions between
the United States and China, significant disruption from
the virus is a reminder of the pitfalls of becoming economically
dependent on one another or allowing too much manufacturing or
sales to consolidate in one place. 
    Some concern is warranted. Starbucks  SBUX.O , which has
been counting on growth in China, this week warned of a
financial hit from the virus as it temporarily closed thousands
of locations. Yangtze Optical Fiber and Cable  6869.HK , based
in Wuhan, where the virus originated, accounts for 55% of global
production by volume of an essential material for 5G telecom
service, according to TS Lombard economists. A shortage is bound
to push prices up.
    What’s more, debates that predated the outbreak now seem
less alarmist. Lawmakers in Washington and elsewhere worry about
the concentrated production of semiconductors. The same will
increasingly hold true for medical equipment and other important
goods. 
    Caution and fear are already taking hold. Cross-border M&A
volume fell about 25% last year while overall deals declined
just 3%, according to preliminary Refinitiv data.
    Net international migration to the United States tumbled to
its lowest level in more than a decade between 2018 and
2019, while the net number of European Union immigrants to the
UK also has fallen. A frostier reception overseas will mean
bright young Asians build more businesses at home. The
coronavirus is bound to infect globalisation, too. 
    On Twitter https://twitter.com/ugalani
    
    CONTEXT NEWS
    - The death toll from the new coronavirus reached 213 on
Jan. 31, with overall cases worldwide rising rapidly in an
outbreak that the World Health Organization declared a global
health emergency. 
    - There were 9,692 cases of infection in China as of Jan.
30, Chinese health authorities said. About 100 cases have been
reported in at least 18 other countries, with no deaths outside
China.  
    - For previous columns by the author, Reuters customers can
click on  GALANI/   
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 (Editing by Jeffrey Goldfarb and Katrina Hamlin)
 ((una.galani@thomsonreuters.com;  Reuters Messaging:
una.galani.thomsonreuters.com@reuters.net))