(BANGKOK) — Authorities in the Chinese city where the coronavirus pandemic began were moving forward Wednesday with efforts to test all 11 million residents for the virus within 10 days after a handful of fresh infections were found there.
The U.S. government’s top infectious disease expert, meanwhile, issued a blunt warning that cities and states could see more COVID-19 deaths and economic damage if they lift stay-at-home orders too quickly — a sharp contrast to President Donald Trump, who is pushing to right a free-falling economy.
“There is a real risk that you will trigger an outbreak that you may not be able to control,” Dr. Anthony Fauci warned a Senate committee and the nation Tuesday as more than two dozen states have begun to lift their lockdowns.
The tension in balancing people’s safety from the virus against the severe economic fallout is playing out in many other countries, too. Italy partially lifted lockdown restrictions last week only to see a big jump in confirmed coronavirus cases in its hardest-hit region. Pakistan reported 2,000 new infections in a single day for the first time after the easing of its lockdown saw crowds of people crammed into markets throughout the country.
China, the first nation to put a large number of its citizens under lockdown and the first to ease those restrictions, has been strictly guarding against any resurgence.
District health commissions and neighborhood committees in the city of Wuhan have been told to develop a plan to test all residents in their jurisdictions, local media reports said. The directive also said the testing should focus on the elderly, densely populated areas and places with mobile populations.
A person who answered the mayor’s hotline in Wuhan on Wednesday said local districts had been given 10 days to carry out the tests. The official declined to give his name because she was not authorized to speak to reporters.
The first cases of the new coronavirus were found in Wuhan in December, and by the end of January the government had placed the entire city and the surrounding region, home to more than 50 million people, under a strict lockdown.
A cluster of six new cases was recently found in one part of the city, the first local infections the government has reported in Wuhan since before the lockdown was eased in early April.
It wasn’t clear how many people would actually still need to be tested, as one expert at Wuhan University told the Global Times newspaper that up to 5 million residents of Wuhan have already been tested since the outbreak began.
Worldwide, the virus has infected more than 4.2 million people and killed over 291,000 — with more than 82,000 deaths in the U.S. alone, the world’s highest toll. Experts say the actual numbers are likely far higher.
Progress was being made in many places, including New Zealand, which reported no new cases on Wednesday. It was the second day in a row without any and the fourth such day since early last week.
Director-General of Health Ashley Bloomfield said it was encouraging news as New Zealand prepares to ease many of its lockdown restrictions on Thursday. Most businesses, including malls, retail stores and sit-down restaurants, will be able to reopen. Social distancing rules will remain in place and gatherings will be limited to 10 people.
“The sense of anticipation is both palpable and understandable,” Bloomfield said.
Authorities in South Korea said Wednesday that they had no immediate plans to revive strict social distancing rules despite a spike in cases linked to nightclubs in Seoul.
In his Senate testimony, Dr. Fauci said more infections and deaths are inevitable as people again start gathering, but how prepared communities are to stamp out those sparks will determine how bad the rebound is.
“There is no doubt, even under the best of circumstances, when you pull back on mitigation you will see some cases appear,” Fauci said.
Move too quickly and “the consequences could be really serious,” he added. It not only would cause “some suffering and death that could be avoided, but could even set you back on the road to try to get economic recovery.”
With more than 30 million people unemployed in the U.S., Trump has been pressuring states to reopen.
A recent Associated Press review determined that 17 states did not meet a key White House benchmark for loosening restrictions — a 14-day downward trajectory in new cases or positive test rates. Yet many of those states have begun to reopen or are about to do so, including Alabama, Kentucky, Maine, Mississippi, Missouri, Nebraska, Ohio, Oklahoma, Tennessee and Utah.
Of the 33 states that have had a 14-day downward trajectory, 25 are partially opened or moving to reopen within days, the AP analysis found. Other states that have not seen a 14-day decline remain closed despite meeting some benchmarks.
Fauci expressed optimism that eventually vaccines will arrive, along with treatments in addition to the one drug that so far has shown a modest effect in fighting COVID–19. But it would be “a bridge too far” to expect them in time for fall, when schools hope to reopen, he said.
Although Trump declared this week that “we have met the moment, and we have prevailed” in increasing and improving virus testing, Republican senators on the panel were noticeably less sanguine.
A lack of testing has dogged the U.S. response from the beginning, when a test developed by the Centers for Disease Control and Prevention ran into numerous problems. Sen. Mitt Romney said the U.S. may finally have outpaced testing leader South Korea but that country has far fewer deaths because it started testing early.
“I find our testing record nothing to celebrate whatsoever,” said Romney, a Republican from Utah.
Trump administration “testing czar” Adm. Brett Giroir said the U.S. could be performing at least 40 million to 50 million tests per month by September. That would work out to between 1.3 million and 1.7 million tests per day. Harvard researchers have said the U.S. must be doing 900,000 by this Friday in order to safely reopen.
Neergaard reported from Washington. Associated Press journalists around the world contributed to this report.
13.9% of people surveyed in New York tested positive for COVID-19 antibodies—a whopping 10 times higher than the state’s presumed infection rate, but still far from what would be considered herd immunity from the pandemic.
KEY FACTS
Herd immunity happens when over 60% of the population develops immunity—antibodies—to a disease, a phenomenon that usually occurs when a population is vaccinated against a virus.
In the new study cited by New York Governor Andrew Cuomo on 3,000 people across the state, 13.9% exhibited COVID-19 antibodies (21% in New York City), implying that 2.7 million people across the state had been exposed to COVID-19, according to Bloomberg, 10-times higher than the presumed infection rate.
Dr. Nate Favini, medical lead at preventative health clinic Forward, told Forbes he’s skeptical about the antibody tests, and cautions against opening up the country to reach herd immunity, saying that would require infecting four-times the amount of people who’ve had the virus—all over the country—leading to a much higher number of deaths by possibly overwhelming hospital resources.
It is unclear whether, and for how long, those with COVID-19 antibodies are immune to second-time infection, as the CDC says survivor immunity is “not yet understood.”
Further, the validity of antibody tests have been widely criticized, as many on the market are not approved by the FDA.
Favini also thinks that more information about how the study was conducted is needed to accept and understand these numbers.
Critical quote
“For people who want to argue that we should just open up the county and let everyone get coronavirus so we can get to herd immunity: You’d have to go through all the cases and all the deaths that New York has experienced—you’d have to go through four-times that, all around the country,” said Favini.
Key background
It may be that COVID-19 is much more common than we initially thought, though this is contested. On Thursday, a new model out of Northeastern University, as reported by New York Times, shows that cities with major COVID-19 outbreaks could’ve had 28,000 cases on March 1, which is contrary to the popular model that showed only 23 cases by this time in the major cities. As of April 22, it also appears that the first COVID-19 death was in California on February 6, rather than February 29 in Washington.
I’m the Under 30 Editorial Community Lead at Forbes. Previously, I directed marketing at a mobile app startup. I’ve also worked at The New York Times and New York Observer. I attended the University of Pennsylvania where I studied English and creative writing. Follow me on Instagram and Twitter at @iamsternlicht.
The infection rate of the coronavirus in New York is slowing, but the state could soon see the full scope of the virus as it begins antibody testing this week. Gov. Andrew Cuomo says antibody testing will help provide the “first true snapshot” of how much of a hold COVID-19 has on the state. On Sunday, the governor toured a testing lab on Long Island, using it as a launching pad for the state’s newest drive toward understanding and defeating the coronavirus. “We’re going to sample people in this state… to find out if they have the [antibodies] that will help us for the first time, what percentage of the population actually has had the coronavirus, and is now at least short term immune to the virus,” the governor said.
A stretcher is moved from an AMR ambulance to the Life Care Center of Kirkland where one associate and one resident were diagnosed with the novel coronavirus (COVID-19) according to a statement released by the facility in Kirkland, Washington on February 29, 2020. – The first fatality from the novel coronavirus has been confirmed on US soil, as President Donald Trump on Saturday urged Americans not to panic. (Photo by Jason Redmond / AFP) (Photo by JASON REDMOND/AFP via Getty Images)
Eleven people have now died in the United States after contracting the novel coronavirus. Ten of the U.S. deaths have been in Washington state and one has been in California, with the latest two fatalities confirmed on Wednesday.
At least 159 people have been diagnosed with the coronavirus—known as COVID-19—in the U.S. so far, according to a virus tracker from researchers at Johns Hopkins University. The infections are scattered across at least 16 U.S. states.
Pence said that all travel coming from Iran has been suspended and “even foreign nationals who visit either [China or Iran] are barred from coming into this country for 14 days.”
Pence also said that the Center for Medicaid and Medicare Services has issued new guidelines for nursing homes nationwide aiming to improve infectious disease control and ensure those operating these facilities are complying with federal standards. Many of the cases in Washington State have been linked with a nursing home.
At a press conference on Tuesday, Pence had said the U.S. is now “screening 100% of all travelers taking direct flights from all airports in Italy and South Korea” to the U.S and that Medicaid and Medicare would cover the cost for Americans who can’t afford COVID-19 testing. He added that new guidance would quickly be issued “to make it clear that, subject to a doctor’s orders, anyone can be tested.”
Federal officials noted that the American public should prepare for “more cases in the community” as the country improves its ability to track and diagnose the disease.
Outside Washington and New York, at least 14 other states have recorded confirmed COVID-19 cases. A number of these cases are Americans evacuated from the virus-stricken Diamond Princess cruise ship in Japan, where over 620 passengers and crew were diagnosed with the virus.
Globally, more than 94,000 cases of COVID-19 have been diagnosed or clinically confirmed as of March 4 and more than 3,200 people have died, according to Johns Hopkins University researchers. The vast majority of cases are in China, but diagnoses in the U.S. are expected to increase over the coming days and weeks, according to the CDC.
U.S. Citizens Document A Day In The Life On Lockdown In Wuhan
On early Wednesday morning, a U.S. plane evacuated around 240 Americans from Wuhan. Justin Steece and Priscilla Dickey were not on that plane with their families.
Here’s what to know about COVID-19 cases in the U.S.
California
California announced the state’s first COVID-19 death and State Gov. Gavin Newsom declared a state of emergency on Wednesday.
Local and federal health officials are now working to contact other cruise passengers as they “may also have been exposed,” according to Placer County health officials. Newsom said about 2,500 passengers traveled on the same voyage as the Placer Country victim.
As of Wednesday, 53 people had tested positive for COVID-19 in California. Of these, 24 were cases related to repatriation flights and 29 cases were not related to these flights; 12 were travel-related. 10 more involved person-to-person spread, four involved community transmission and three were “currently under investigation.”
Officials in Washington State confirmed a tenth coronavirus death on Wednesday and the state currently has 39 COVID-19 cases.
Nine of the deaths are in King County, and an additional death is in Snohomish County. The most recently reported deaths in King County include a woman in her eighties who was never hospitalized and died at her family home, and a man in his 50s who was hospitalized at Harborview Medical Center. Both of them died on Feb. 26 and were residents of Life Care Center in Kirkland, a long-term residential facility where more than 50 people have reported symptoms of possible COVID-19 infection.
On Tuesday, Acting U.S. Department of Homeland Security Secretary Chad Wolf said that he had ordered the facility to close “out of an abundance of caution” and “directed those employees to telework, if possible, in order to reduce the threat of community spread of the coronavirus.”
The center said in a statement Wednesday that there are several confirmed COVID-19 cases connected to the facility. It added that current residents and associates continue to be monitored closely” and that it is following the infection control recommendations from the CDC. The center had previously said all visits from family and volunteers are suspended for the time being, and new residents are currently not being admitted to the center.
King County announced an additional seven new COVID-19 cases on Tuesday. Thirty-one cases in the state, including those who died, are in King County. At least another nine are in Snohomish County, according to Washington State’s Department of Health. About 230 people at risk of having been exposed to the coronavirus are under medical supervision.
King County signed an emergency declaration on Sunday allowing it to take extra steps to respond to the COVID-19 outbreak. “Among the first actions: purchasing a motel and setting up modular housing units on publicly-owned parking lots and other available land,” the county said in a statement.
Health officials say the first patient who succumbed to the virus had no known history, travel or contact with a known COVID-19 case, suggesting he was infected by human-to-human transmission (often referred to as community transmission).
The results of a study published by Trevor Bedford, a computational biologist at Fred Hutchinson Cancer Research Center in Seattle, suggests that the true number of infections in the state is “a few hundred.”
The study “strongly suggests that there has been cryptic transmission in Washington State for the past six weeks,” Bedford tweeted.
Washington Governor Jay Inslee declared a state of emergency on Saturday in response to the new cases, and directed state agencies to use “all resources necessary to prepare for and respond to the outbreak.”
The first case of COVID-19 in the U.S. appeared in Washington on Jan. 21. A 35-year-old man presented himself to an urgent care clinic in Snohomish County, Wash., after four days of cough and fever, according to the New England Journal of Medicine, which reported that he had recently been visiting family in Wuhan.
The man was released from a Washington hospital on Feb. 4, according to the Associated Press.
Cruise ship evacuees
On Feb. 17, the U.S. State Department evacuated more than 300 American citizens from a quarantined cruise ship in Japan. The Diamond Princess has the largest outbreak of the novel coronavirus outside China, with at least 621 confirmed cases so far.
During the evacuation process, American officials learned that 14 of the Americans being repatriated were infected with COVID-19, according to a joint statement from the U.S. State Department and U.S. Department of Health and Human Services.
After consulting with HHS, officials with the State Department decided to allow the 14 individuals, “who were in isolation, separated from other passengers, and continued to be asymptomatic, to remain on the aircraft to complete the evacuation process,” the statement said.
CDC spokesperson Richard Quartarone told TIME hospitalized patients are at facilities in Sacramento and San Antonio, Texas, or at the Nebraska Medical Center.
Evacuees who were not hospitalized were held in quarantine for 14 days after departing planes at Travis Air Force Base in Sacramento, Calif. and Joint Base San Antonio-Fort Sam Houston in San Antonio, Texas, officials said.
Most, if not all, of these evacuees have since been released from federal quarantine.
More than 100 American citizens who had been on the Diamond Princess remained in Japan, including in hospitals, the CDC said on Feb. 18. The CDC specified that these citizens will only be allowed to fly back to the U.S. if they test negative for and don’t show any symptoms of the virus during the 14-day period.
“If an individual from this cruise arrives in the United States before the 14-day period ends, they will still be subject to a mandatory quarantine until they have completed the 14-day period with no symptoms or positive coronavirus test results,” the CDC said.
The CDC also highlighted concerns with the quarantine process on board the ship, saying that it may have slowed the spread of the disease but that it “may not have been sufficient to prevent transmission among individuals on the ship.”
New York
On Thursday, New York Gov. Andrew M. Cuomo confirmed 11 additional cases of COVID-19, bringing the total in the state to 22. Of the new cases, eight are in Westchester, two are in New York City and one is in Nassau County. “We are trying to contain as much as possible the spread of each case we find – but we expect more cases,” Cuomo said.
Thursday’s cases in New York City include a man in his 40s and a woman in her 80s; neither had traveled to areas with known outbreaks or are connected to other individuals already diagnosed with the disease, according to New York City Mayor Bill de Blasio.
On Wednesday afternoon, Cuomo confirmed five new cases, all in a single family from New Rochelle: a wife and husband in their 40s and three of their children. The entire family is under self-quarantine, Cuomo said.
On Wednesday morning, Cuomo had confirmed an additional four cases of coronavirus. All four are tied to the state’s second case of COVID-19, announced Tuesday — a man in his 50s who lives in Westchester County and works in Manhattan. Those four cases included his wife, two of his children and a neighbor who drove him to the hospital, Cuomo said.
The female child attends SAR Academy and High School in the Bronx and the male child attends Yeshiva University in Manhattan and has not been on campus since Feb. 27, according de Blasio. The children and their mother remain isolated at their home in Westchester, de Blasio said.
Cuomo noted on Tuesday that the man in his fifties had not traveled to regions with increasing COVID-19 cases, but had recently been to Miami. However he noted “that is not a place we have known there is any cluster of coronavirus.”
On Sunday, Cuomo confirmed New York’s first case of the coronavirus. He said on Twitter that a woman in her late 30s contracted the virus while traveling in Iran. She has mild respiratory symptoms but is not in serious condition, and is currently isolated in her home.
Cuomo said there is “no reason for anxiety” as the “general risk remains low in New York.” Still, residents rushed to purchase masks and hand sanitizers at pharmacies, which saw long lines out the door, according to the New York Times. Many said they were out of stock.
Nebraska
Doctors in Nebraska have treated 13 COVID-19 patients — all of whom were on the Diamond Princess cruise ship in Japan, according to the New York Times.
Texas
Texas has 12 confirmed cases of COVID-19 as of Wednesday, according to the Texas Tribune.
Eleven involve evacuees who were infected overseas before arriving at the San Antonio Lackland Air Force Base for quarantine. The only case identified outside of the site is a man in his 70s who lives in the Houston area. He recently returned from travel abroad and is currently isolated in the hospital, according to Texas Health and Human Services.
The City of San Antonio Metropolitan Health District and the CDC announced Feb. 13 that the first person testing positive for COVID-19 in Texas was one of the Americans evacuated from Wuhan and transported to the military base on Feb. 7, after leaving Wuhan the previous day.
On the morning of Feb. 11, the patient exhibited signs of a fever, Jennifer McQuiston, a CDC division deputy director, said. The person was transported to a hospital that morning, where samples were gathered and sent to the CDC overnight. Officials received the positive diagnosis the following day.
“[That patient is] receiving excellent medical care,” McQuiston said at a Feb. 13 press conference. “They were, of course, not happy to learn of their diagnosis last night, and they do have loved ones in the United States that they are in contact with by phone, and we wish this individual well.”
Dr. Anita Kurian, assistant director at the San Antonio Metropolitan Health District, also said at the press conference that “the risk for us at this time to the community here is still considered low.”
Illinois
Illinois officials said it has four “presumed positive” cases on Tuesday. The third and fourth cases are a married man and woman in their seventies.
The first case in Illinois was a woman in her 60s who had returned to the U.S. from Wuhan on Jan. 13, health officials said at a press briefing on Jan. 30. Her husband then contracted the virus, becoming the first confirmed case of person-to-person transfer of the virus in the U.S.
The Illinois Department of Public Health announced Feb. 12 that it became the first state in the U.S. to begin in-state testing for the virus.
Oregon
Oregon has confirmed three “presumptive positive” cases of COVID-19 in the state. One of those cases was confirmed by the CDC on Wednesday.
State officials confirmed a third case on Tuesday: an adult Umatilla County resident who is hospitalized in Walla Walla, Wash. Initial reports suggest that the resident recently went to a youth basketball game at a middle school. Athena-Weston School District officials closed the gym in question and would “conduct a deep cleaning out of an abundance of caution,” health officials said in a statement.
The state’s first and second COVID-19 cases are adults in Washington County who live together. Neither person has “ a history of travel to a country where the virus was circulating, nor is believed to have had a close contact with another confirmed case,” health officials said in a statement. “As such, public health officials are considering it a likely community-transmitted case, meaning that the origin of the infection is unknown.”
Florida
The CDC confirmed two cases of COVID-19 in Florida, the Florida Department of Health said on Monday. Officials said on Tuesday that a third person in the state had tested positive; she is the sister of a person already confirmed to have the virus.
The agency had said in a previous statement on Sunday that the first patient is an adult resident of Manatee County who has not traveled to countries identified for restricted travel by the CDC; the second patient is an adult Hillsborough County resident who had traveled to Italy. Both individuals would continue to “remain isolated until cleared by public health officials,” the Florida Department of Health said.
Georgia
Georgia Gov. Brian Kemp confirmed the state’s first two cases of COVID-19 on Monday evening.
Both individuals are residents of Fulton County who live in the same household; one recently returned from Italy and both are isolated at home with mild symptoms, according to a statement from the governor’s office.
“We knew that Georgia would likely have confirmed cases of COVID-19, and we planned for it. The immediate risk of COVID-19 to the general public, however, remains low at this time,” said Dr. Kathleen E. Toomey, Commissioner of the Georgia Department of Public Health.
Rhode Island
Rhode Island announced its first COVID-19 “presumptive positive” case on Sunday: a person in their 40s who had traveled to Italy in mid-February.
Dr. Nicole Alexander-Scott, Director of the Rhode Island Department of Health, said in a statement that the agency has been “preparing for weeks” and “fully anticipated having a first case of COVID-19.”
“We are not seeing widespread community transmission in Rhode Island, and the general level of risk for Rhode Islanders is still low,” Alexander-Scott said.
The agency announced a second COVID-19 “presumptive positive case” later the same day: a teenager who is “at home with mild symptoms.” She had been on the “same trip to Europe in mid-February as the male in his 40s,” according to the Rhode Island Department of Health.
“All 38 of the people who went on this trip will be self-monitoring for symptoms at home for 14 days with public health supervision, the department said in a statement. “They have been instructed to not go to school or work and to remain at home for these 14 days.”
Arizona
Arizona confirmed on Tuesday its second “presumed positive” case of COVID-19, in a man in his twenties.
“This individual is a known contact of a presumed positive case outside of Arizona who had traveled to an area with community spread of COVID-19,” the Arizona Department of Health Services news release.
The first case of COVID-19 was confirmed in Arizona by the CDC on Jan. 26. The person had also recently returned to the U.S. after visiting Wuhan. The Arizona Department of Health Services said in a public statement that the person is “a member of the Arizona State University community who does not live in university housing,” and added that they were not severely ill but would be kept in isolation.
The infected man was subsequently released from isolation 26 days after testing positive for COVID-19, according to the Associated Press.
New Hampshire
The state’s first case was announced Monday in a hospital employee who had recently traveled to Italy. Health officials later learned this person broke quarantine to attend a social event on Feb. 28 and said they would contact attendees who “had close contact with the person.”
New Hampshire announced its second “presumed positive” case of COVID-19 on Tuesday. State officials said the person, an adult male from Grafton County, had close contact with the first case and is currently isolated at home.
At this time, there is no evidence of more widespread community transmission in New Hampshire,” said state Epidemiologist Dr. Benjamin Chan in a statement after the first case was announced.
New Jersey
On Wednesday, New Jersey announced its first “presumptive positive case” of COVID-19 — a man in his 30s who has been hospitalized in Bergen County.
Health officials maintained that “most New Jersey residents” are still at low-risk.
Massachusetts
On Monday, state health officials announced a presumptive case: a woman who had recently traveled to Italy.
On Feb. 1, the CDC announced that a man in his 20s who lives in Boston was diagnosed with COVID-19; he had recently traveled to Wuhan.
The Massachusetts Department of Public Health said the man sought medical care soon after his return to Boston. He has since been in isolation, and those who came in contact with him have been identified and are being monitored for symptoms, the agency said in a public statement.
“We are grateful that this young man is recovering and sought medical attention immediately,” said Monica Bharel, Massachusetts Public Health Commissioner, in the statement. “Massachusetts has been preparing for a possible case of this new coronavirus, and we were fortunate that astute clinicians took appropriate action quickly. Again, the risk to the public from the 2019 novel coronavirus remains low in Massachusetts.”
Wisconsin
The Wisconsin Department of Health Services and the CDC announced the first case of COVID-19 in the state on Feb. 5. The person was only identified as “an adult with a history of travel to Beijing, China prior to becoming ill and was exposed to known cases while in China.”
Wisconsin health officials said in a public statement that the person is isolated at home, and is doing well.
North Carolina
North Carolina announced its first “presumed positive” case of COVID-19 on Tuesday. According to state officials, the person traveled to Washington state and was exposed at a long-term care facility where there is currently a COVID-19 outbreak.
The new coronavirus Covid-19 will end up being the final curtain on China’s nearly 30 year role as the world’s leading manufacturer.
“Using China as a hub…that model died this week, I think,” says Vladimir Signorelli, head of Bretton Woods Research, a macro investment research firm.
China’s economy is getting hit much harder by the coronavirus outbreak than markets currently recognize. Wall Street appeared to be the last to realize this last week. The S&P 500 fell over 8%, the worst performing market of all the big coronavirus infected nations. Even Italy, which has over a thousand cases now, did better last week than the U.S.
China On Hold
On January 23, Beijing ordered the extension of the Lunar New Year holiday, postponing a return to work. The coronavirus was spreading fast in the epicenter province of Hubei and the last thing China wanted was for that to be repeated elsewhere. Travel restrictions and quarantines of nearly 60 million people drove business activity to a standstill.
The most frightening aspect of this crisis is not the short-term economic damage it is causing, but the potential long-lasting disruption to supply chains, Shehzad H. Qazi, the managing director of China Beige Book, wrote in Barron’s on Friday.
Chinese auto manufacturers and chemical plants have reported more closures than other sectors, Qazi wrote. IT workers have not returned to most firms as of last week. Shipping and logistics companies have reported higher closure rates than the national average. “The ripple effects of this severe disruption will be felt through the global auto parts, electronics, and pharmaceutical supply chains for months to come,” he wrote.
Workers in uniforms at a LED lighting factory in Dongguan, China. Around 70% of the world’s LED … [+]
Getty
That China is losing its prowess as the only game in town for whatever widget one wants to make was already under way. It was moving at a panda bear’s pace, though, and mostly because companies were doing what they always do – search the world with the lowest costs of production. Maybe that meant labor costs. Maybe it meant regulations of some kind or another. They were already doing that as China moves up the ladder in terms of wages and environmental regulations.
Under President Trump, that slow moving panda moved a little faster. Companies didn’t like the uncertainty of tariffs. They sourced elsewhere. Their China partners moved to Vietnam, Bangladesh and throughout southeast Asia.
Enter the mysterious coronavirus, believed to have come from a species of bat in Wuhan, and anyone who wanted to wait out Trump is now forced to reconsider their decade long dependence on China.
Retail pharmacies in parts of Europe reported that couldn’t get surgical masks because they’re all made in China. Can’t Albania make these things for you? Seems their labor costs are even lower than China’s, and they are closer.
The coronavirus is China’s swan song. There is no way it can be the low-cost, world manufacturer anymore. Those days are coming to an end. If Trump wins re-election, it will only speed up this process as companies will fear what happens if the phase two trade deal fails.
Picking a new country, or countries, is not easy. No country has the logistic set up like China has. Few big countries have the tax rates that China has. Brazil surely doesn’t. India does. But it has terrible logistics.
Then came the newly signed U.S. Mexico Canada Agreement, signed by Trump into law last year. Mexico is the biggest beneficiary.
It’s Mexico’s Turn?
Hecho en Mexico. Porque no?
Getty
Yes. It is Mexico’s turn.
Mexico and the U.S. get a long. They are neighbors. Their president Andres Manuel Lopez Obrador wants to oversee a blue collar boom in his country. Trump would like to see that too, especially if it means less Central Americans coming into the U.S. and depressing wages for American blue collar workers.
According to 160 executives who participated in Foley & Lardner LLP’s 2020 International Trade and Trends in Mexico survey, released on February 25, respondents from the manufacturing, automotive and technology sectors said they intended to move business to Mexico from other countries – and they plan on doing so within the next one to five years.
“Our survey shows that a large majority of executives are moving or have moved portions of their operations from another country to Mexico,” says Christopher Swift, Foley partner and litigator in the firm’s Government Enforcement Defense & Investigations Practice.
Swift says the move is due to the trade war and the passing of the USMCA.
The phase one China trade deal is a positive, but the coronavirus – while likely temporary — shows how an over-reliance on China is bad for business.
There will be fallout, likely in the form of foreign direct investment being redirected south of the Rio Grande.
“Our estimates of possible FDI to be redirected to Mexico from the U.S., China and Europe range from $12 billion to $19 billion a year,” says Sebastian Miralles, managing partner at Tempest Capital in Mexico City.
“After a ramp-up period, the multiplier effect of manufacturing FDI on GDP could lead Mexico to grow at a rate of 4.7% per year,” he says.
Trump arrives to speak about the United States – Mexico – Canada agreement, known as USMCA, during a … [+]
AFP via Getty Images
Mexico is the best positioned to take advantage of the long term geopolitical rift between the U.S. and China. It is the only low cost border country with a free trade deal with the United States, so there you have it.
Thanks to over 25 years of Nafta, Mexico has become a top exporter and producer of trucks, cars, electronics, televisions, and computers. Shipping a container from Mexico to New York takes five days. It takes 40 days from Shanghai.
They manufacture complex items like airplane engines and micro semiconductors. Mexico is the rank the 8th country in terms of engineering degrees.
Multinational companies are all there. General Electric is there. Boeing is there. Kia is there.
The trade war is yet to be decided, but the damage that has already been done will not be undone. Room for a new key commercial ally is open.
A worker at Canada’s Bombardier factory in Mexico. (Photo by Carlos Tischler/SOPA Images/LightRocket … [+]
LightRocket via Getty Images
Safety remains a top issue for foreign businesses in Mexico who have to worry about kidnappings, drug cartels, and personal protection rackets. If Mexico was half as safe as China, it would be a boon for the economy. If it was as safe, Mexico would be the best country in Latin America.
“The repercussions of the trade war are already being felt in Mexico,” says Miralles.
Mexico replaced China as the U.S. leading trading partner. China overtook Mexico only for a short while.
According to Foley’s 19 page survey report, more than half of the companies that responded have manufacturing outside of the U.S. and 80% who do make in Mexico also have manufacturing elsewhere. Forty-one percent of those operating in Mexico are also in China.
When respondents were asked about whether global trade tensions were causing them to move operations from another country to Mexico, two-thirds said they already had or were planning to do so within a few years. A quarter of those surveyed had already moved operations from another country to Mexico on account of the trade war.
For those considering moving operations, 80% said they will do so within the next two years. They are “doubling down on Mexico”, according to Foley’s report.
Of the companies that recently moved their supply chain, or are planning to do so, some 64% of them said they are moving it to Mexico.
I’ve spent 20 years as a reporter for the best in the business, including as a Brazil-based staffer for WSJ. Since 2011, I focus on business and investing in the big emerging markets exclusively for Forbes. My work has appeared in The Boston Globe, The Nation, Salon and USA Today. Occasional BBC guest. Former holder of the FINRA Series 7 and 66. Doesn’t follow the herd.
The coronavirus outbreak has been hitting China’s economy hard as many businesses have had to temporarily shut down their operations amid tight quarantine rules. But measures to stop the spread of the illness have also become an unexpected boon for at least one industry: online education.
With the opening of schools pushed back to March and all extracurricular activities suspended, tens of millions of students have been told to go online to study. And the country’s providers of online tutoring services are suddenly experiencing a surge in interest from students and their parents.
The biggest winner appears to be TAL Education’s Zhang Bangxin, who saw his wealth increase by $1.7 billion, giving him a current net worth of at least $10 billion. His New York-listed company rallied 20% last month on expectations of strong growth. The 40-year-old Zhang has catapulted past the likes of JD.com’s founder Richard Liu ($8.7 billion) and Baidu’s Robin Li ($7.1 billion) to reach No. 24 on China’s wealth rankings.
“This is like a natural marketing campaign for these companies,” says Jiao Wei, an analyst at Shanghai-based research firm 86 Research. “Parents who didn’t know much about online education can now see how it works and how classes are being streamed online.”
TAL has partnered with more than 300 public schools across China to stream free classes, and its Xueersi unit is providing complementary K-12 online tutoring sessions. Other education companies are also launching more e-learning courses, while developing data tools to analyze student performance and help teachers track their progress.
A teacher presents a lesson to her students by using a multi-media network education system on … [+]
TPG/Getty Images
Shares of New York-listed New Oriental rose 7.3% last month, adding $190 million to the wealth of its founder Yu Minhong. His current net worth is estimated at $3.4 billion. And Chen Xiangdong, founder of GSX Techedu, also listed in New York, has seen his net worth rise to $4.75 billion, thanks to a 40% rally that added another $1.3 billion to the value of his stake in the same period. The three education billionaires’ combined $3.2 billion gain makes them stand out as rare winners at a time when the coronavirus outbreak has battered industries ranging from hospitality to retail and logistics. As of Thursday, the virus that had infected nearly 80,000 people in China has been estimated to shave $60 billion off China’s economic growth.
Analysts say that education companies are likely to benefit from the increased attention for their services for some time. After both students and parents become more familiar with virtual classrooms, they can be enticed to try other products and pay for services down the road. Terry Weng, a Shenzhen-based analyst at research firm Blue Lotus Research Group, estimates that 22% of Chinese K-12 students will take part in online tutoring by end of this year, up from 17% in 2019. Driven by tough competition for good schools and jobs, as well as technological advances in virtual learning, China’s online education market is expected to more than triple to 696 billion yuan ($99.3 billion) in 2023 from last year’s 203 billion yuan, according to research firm Frost & Sullivan.
But analysts also caution that the current e-learning boom may not translate into higher revenue or profit—at least not in the short term. In a bid to attract more users, many services are being offered for free or at a discount. Blue Lotus’s Weng estimates that when TAL actually charges its virtual classes, they are sold at a 10% to 30% discount compared with lessons for its offline learning centers. The company generated $6.5 million in profits from $2.5 billion in sales during the first nine months of 2019. Before the virus struck, TAL was estimated to derive between 20% and 30% of its revenues from online learning and the remainder came from its offline centers.
A student learning from a teacher using a multi-media network education system on 9 February, 2020 … [+]
TPG/Getty Images
Still, investors seem willing to overlook any short-term loss and focus on future gains. Aside from faster user growth for their online services, TAL and New Oriental’s offline businesses may also capture a larger share of the overall education market. This is due to the fact that smaller service providers are running out of cash, and probably won’t stay in business much longer. They still have to pay rent and teachers’ salaries, even when China suspended all types of offline classes and ordered tuition refunds.
“The gradual exit of smaller education firms means there are more opportunities for TAL and New Oriental,” Weng says. “Investors are more keen for their future performance.”
I am a Beijing-based writer covering China’s technology sector. I contribute to Forbes, and previously I freelanced for SCMP and Nikkei. Prior to Beijing, I spent six months as an intern at TIME magazine’s Hong Kong office. I am a graduate of the Medill School of Journalism, Northwestern University. Email: ywywyuewang@gmail.com Twitter: @yueyueyuewang
There are at least 29 confirmed cases of Covid-19 in the United States. It’s a small fraction of the number of cases in China, but the fear surrounding the coronavirus outbreak knows no bounds. Many Chinese students in America are on edge, and worry for family members in China. CGTN’s Dan Williams met some students at Northwestern University.
