The weather may be warm and spring-like across America, but make no mistake, a storm is brewing.
The storm is the coronavirus outbreak, or more specifically, the federal government’s response to it. Starting this week, life will be unrecognizable for most Americans: schools, museums, movie theaters, bars, and restaurants will all be closed, likely for weeks or perhaps longer. Public spaces will be empty. There will little traffic on the roads and few passengers on trains and subways. Large gatherings for any purpose will be barred. Travel bans barring Europeans will likely be extended to include other countries. Businesses will order employees to work remotely, dramatically alter schedules, or shut down. Layoffs will spike, and financial markets will tumble.
As America nears the dark tunnel of a coronavirus-caused government lockdown, it can learn from the experiences of China, which is about to exit from the other end.
China has been in coronavirus-induced lockdown since late January. People have been largely barred from leaving the house to attend school, work, or religious ceremonies; trips to purchase food and other necessities have been tightly controlled. The severe restrictions are showing results. New coronavirus cases have slowed to a trickle, and for the first time, there are more coronavirus-related deaths outside of China than inside, according to the Wall Street Journal.
Anton Ware is a partner at the law firm Arnold & Porter and is based in Shanghai. He says after more than six weeks of lockdown, China appears nearly ready to ease restrictions and start up its economy.
“The epidemic is now firmly under control in China (although no one is hanging any ‘mission accomplished’ signs just yet),” Ware wrote via email. The virus has been largely contained outside the epicenter in the southern province of Hubei, he said, and there have been only a handful of cases in Shanghai, a city of 23 million people. Most of the new cases in China are from infected travelers from outside China who must enter a 14-day quarantine.
Factories are open, but some employees cannot make it to work because of quarantines and other government-imposed restrictions. Most offices are still working remotely, he said, and schools and other public places are still closed.
“The government and the society at large seem unwilling to let down their guard just yet,” he said.
China’s national lockdown has taken a terrible toll on the country’s economy in the first two months of the year, according to recently released data from the National Bureau of Statistics of China. While the government attempted to paint a rosy picture, the statistics showed steep declines in construction, real estate values, and manufacturing productivity in January and February, with national unemployment rising to 5.7 percent, according to the Wall Street Journal.
Kent Kedl, a Shanghai-based partner with global risk consultant group Control Risks, says Chinese manufacturers in and around Shanghai, at least, are nearly back to full strength. But as the rest of the world struggles to contain the coronavirus, he said, “They’re finding that the ‘demand’ side of the equation is not fully operative … so they can’t get back up and running either.”
Ware said his firm is advising clients to do what is necessary to survive a U.S.-imposed lockdown.
“The first order of business for many companies will be to survive to see the recovery,” he said. “This will involve, for example, taking smart advantage of whatever relief is made available by the national and local governments (e.g., stimulus, tax relief, regulatory easing, etc.); husbanding and making smart use of available cash; and proactively managing relationships with customers, consumers, suppliers, and other business partners, with an eye toward avoiding and amicably resolving disputes and finding sensible ways to burden-share.”
The crisis will pass, first in China and then elsewhere. There will be a “bounce” afterwards and a sharp uptick in demand and orders, Kedl said.
“We’ve been focusing on helping clients with the ‘recovery’ stage of crisis management, working to determine what the market will be like when the smoke clears and being ready to hit the ground running,” he said.
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