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 International Energy Agency (IEA) forecasts global demand will contract in the first quarter, the first in more than a decade.
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" who are directly affected by the closure of many factories in China. Apple has just mentioned difficulties in supplying iPhones, made 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 delay the resumption of production in their assembly plants. The South Korean Hyundai also had to stop production.
The American Tesla has recognized that the epidemic could delay the acceleration of the production rate of its gigantic new factory in Shanghai.
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.
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 world number two in spirits Pernod Ricard has revised its profit targets downwards, of which China is the second market: it generates 10% of its sales there.
Postponed film releases, closed rooms and studios plagued by anxiety: the epidemic also risks weakening a market that has become crucial for Hollywood productions.
The tourism sector is directly concerned by the quarantine of dozens of Chinese cities, and the ban on organized trips by Chinese to abroad. According to figures from Coface, Chinese tourists spend $ 130 billion worldwide each year.
Air traffic has also been affected by the pandemic. Several airlines, including Air France, British Airways, Air Canada, Lufthansa and Delta, have suspended their flights to mainland China. Based in Hong Kong, Cathay Pacific suffers particularly.
The tourism industry in Italy fears an annual loss of 4.5 billion euros, according to the laboratory of ideas Demoskopika and the epidemic of Codiv-19 has caused up to 70% of cancellations of the reservations of Chinese tourists in Greece.
© 2020 AFP