Paris (AFP)

A voracious importer of raw materials, a factory in the world, a large consumer of luxury and travel ... China is essential throughout the production chains of multinationals, now disrupted by the epidemic of coronavirus.

Ogre of raw materials

A 0.3 point drop in growth in the world's second largest economy this year would have an almost identical impact (-0.2 points) on overall global growth, Deutsche Bank said. Suffice to say that the countries exporting raw materials would be directly affected by the slowdown in activity by the Asian giant. According to credit insurer Coface, the Asian giant absorbs nearly 14% of world oil production. The action of the Saudi oil giant Aramco has also lost most of the gains made since its listing on the Ryad Stock Exchange in December.

China also gobbles up nearly 40% of the world's metal production. With Chinese factories idling, multinational mining companies are inevitably exposed: the Australian BHP, the world's largest producer of minerals, warned that demand for the raw materials it produces could be affected, unless the epidemic is contained by the end of March. Some countries, like Chile, which extracts almost a third of the world's copper, are exposed. There are also repercussions for agri-food products, such as soybeans, of which Brazil is the world's largest producer.

Factory of the world

For thirty years, China has become the factory of the world. It is essential for the production of mobile phones, flat screens, computers, spare parts for cars and many other objects. The Fitch agency has downgraded its rating of "all manufacturers of electronic components", directly affected by the closure of many factories in China. Apple has reported difficulties in sourcing iPhones, made in China.

The French energy equipment and services group Schneider Electric, whose Wuhan plant has still not restarted, estimated the losses expected in the first quarter at 300 million euros.

Danish shipping giant AP Moeller — Maersk expects a "weak" start to the year due to longer-than-usual shutdowns of factories in China.

On the automotive side, Fiat Chrysler announced the temporary shutdown of its Kragujevac plant in Serbia "because of a lack of availability of certain components from China". The Japanese Toyota and the German Volkswagen had to stop production in their assembly plants. The South Korean Hyundai also had to stop production.

The epidemic caused by the coronavirus can also lead to problems of supply of medicines in Europe because a "large part" of "active pharmaceutical ingredients" is manufactured in Asia, warned the French Academy of Pharmacy.

Greedy consumer

Over the years, with the emergence of a middle class, China has gradually shifted from a production economy to a consumption economy. This market of more than a billion inhabitants has become essential. Apple, already disturbed by the epidemic in terms of its supplies, is also suffering at the end of the chain since the demand for its products, which the Chinese are fond of, is falling.

Chains like Starbucks, for which China is the world's second largest market, have closed many outlets there. Sports equipment manufacturer Adidas has seen its activities in China fall by 85% over one year since the end of January.

The luxury industry is shaken. Kering (Gucci, Yves Saint Laurent, etc.) recorded a sharp drop in sales in mainland China and the clothing house Burberry warned of a "significant negative impact".

The tourism sector is directly concerned by the quarantine of dozens of Chinese cities and the prohibition of organized trips by Chinese abroad. According to figures from Coface, Chinese tourists spend $ 130 billion worldwide each year.

Air traffic has also been affected by the epidemic. Several airlines, including Air France, British Airways, Air Canada, Lufthansa and Delta, have suspended their flights to mainland China. Air France-KLM also estimated Thursday between 150 and 200 million euros the shortfall due to the suspension of the group's flights to China from February to April.

In the tourism sector, the Accor hotel group said it had closed 200 of the 370 hotels in its network in China and Hong Kong.

© 2020 AFP