As New Coronavirus Cases Slow In China, Factories Start Reopening

12 hours ago
Originally published on February 29, 2020 7:32 am

As new cases of coronavirus infection slow in China, the country is gradually getting back to work. Authorities and businesses are taking a range of measures: Local governments are chartering buses for workers. Some companies are buying out entire hotels to house quarantined staff. A temporarily shuttered movie studio is even loaning employees to factories that are short on labor.

Strict quarantine measures designed to stop the spread of the new coronavirus prevented nearly 300 million migrant workers from returning to their jobs, shutting down one of the largest economies in the world for nearly three weeks and paralyzing global supply chains.

Now the government is advising local officials to balance seemingly contradictory mandates: use all methods possible to limit the further spread of a deadly new virus while meeting annual economic growth targets.

Earlier this month, at a top-level political meeting, China's leader Xi Jinping called for an all-out "people's war" against the deadly virus. But at the same meeting, he also urged officials to continue to "reach goals and tasks of economic and social development this year."

And so, beginning last week, factories across China started slowly reopening. At least eight provinces and regions downgraded their emergency levels, loosening the most draconian restrictions on movement to allow people to leave their homes and return to work. But the biggest bottleneck continues to be a shrunken workforce, as many returning workers must be quarantined for two weeks before entering factories.

A late-February survey by the Cheung Kong Graduate School of Business in Beijing found that 45% of firms surveyed had "no way to resume work," mostly due to labor shortages. Just 11% predicted their production capacity would reach between 80% and 100% by the end of February.

China's purchasing managers' index, a measure compiled by China's state statistics agency and an industry group that measures manufacturing and service sector activity, plunged to 35.7 in February from January's 50. The index is on a 100-point scale; numbers below 50 indicate activity contracting.

According to the European and German chambers of commerce, 59% of their member companies in China responding to an internal survey claimed the outbreak and China's containment measures have had a "high impact" on their businesses; 48% said they would lower their financial outlook by more than 10% for the first half of 2020.

Another survey, released Thursday by the American Chamber of Commerce in China, found that nearly a third of American firms surveyed are facing increased costs and sinking revenues as a result of disruptions to operations and travel.

A migrant worker has his temperature taken on Feb. 25 after arriving on a chartered "point-to-point" bus from Henan, at a factory in Zouping, in China's Shandong province. Many enterprises are arranging chartered transport to enable employees to return to work.
STR / AFP via Getty Images

Especially for large-scale companies that are integral to global supply chains, time is of the essence. One such company is Ningbo Xusheng Auto Technology, which manufactures machine parts for European and American cars in the Chinese port city of Ningbo, in Zhejiang province.

"Our clients are international, and they didn't stop operations during the outbreak. Unlike other companies who sell to Chinese clients, who all had to shut down, we really have to get back to work," Cloud Zhao, a Xusheng sales director, tells NPR. The factory is now running at 80% of its pre-virus operating capacity, Zhao says, after going through an expedited permit process with local authorities.

All businesses must navigate a lengthy list of requirements to obtain permission from local authorities to reopen. First, Xusheng provided officials with a full list of employees, which in turn was vetted using "big data methods," says Zhao. Then workers had to enter their national ID numbers and phone numbers into a new provincial app created as part of virus control efforts, which identifies the cities and provinces they visited in the previous two weeks. Xusheng Auto must quarantine for two weeks anyone who spent time in a heavily infected area, before allowing them to enter the factory.

To protect healthy workers, the automaker also had to show teams of inspectors that it is stocked with masks and disinfectants, and has enough space to serve as quarantine wards.

Michael Chen, a manager at an electronics manufacturing plant in the neighboring province of Jiangsu, says his company has rented an entire hotel — now empty because there are no travelers — to quarantine his returning workers. His plant, normally staffed by around 2,000 workers, is back up to 70% of its pre-virus operation levels, he says, but revenues likely will only be about half what they were before the outbreak.

"Our sales have been badly hit. It has been a big hassle," says Chen. "It is not that demand is actually down, but some of our supply chains are not coming back, especially if they are in Hubei province." Hubei is the epicenter of China's coronavirus outbreak, where most of the coronavirus' 2,800-plus deaths have occurred.

Workers wear protective face masks as they sew shoe parts at the Zhejiang Xuda Shoes Co. factory in Wenzhou, China, on Feb. 27.
Noel Celis / AFP via Getty Images

Chen says every week he has to buy thousands of surgical masks — which now cost three times the normal price — for his workers. The city of Kunshan, where Chen works, chartered buses to ferry workers back to work, but Chen says there were not enough: "You have to mainly rely on yourself. A lot of this is outward-oriented propaganda. In reality, the measures were not enough."

Last weekend, Xi gave a teleconferenced speech to 170,000 officials, promising the economic impact on would be "short-lived." China's central bank has also said it will make it easier for small- and medium-sized businesses to take out loans or repay debt, perhaps even cut taxes, but more specific measures haven't been spelled out yet.

"We haven't received very specific policies of how the central or local government will support private businesses, but we trust that they are also waiting for more specific information," said Zhao, of Xusheng Auto.

Chucheng Feng, a partner in the independent research firm firm Plenum, says over-centralization of power in China's political system means policy can move slowly: "It takes time, province to province, to comprehend what Xi Jinping is talking about. Especially lower-ranking officials, they don't have incentives to work on their own, because the risk is if they are at odds with central policy, from central decision making, they may be purged."

Calls by the central government to ease access to loans and delay paying off corporate debts are also a sharp reversal from earlier instructions passed on to local governments. "They've been told the entire year to focus on poverty alleviation, to focus on financial de-risking, which means they were originally under the impression to lower credit," explains Feng.

Even if business owners manage to secure reopening permits, widespread labor shortages are still hampering full resumption of national production. Research released this week on Henan province, a major source of migrant labor for industrial hubs like Beijing and the Pearl River Delta, indicated that only 5% of migrant workers have been able to leave.

To address the labor shortfall, regional authorities are promoting a plan they've dubbed "employee-sharing," which allows firms to borrow workers from places that remain shut down.

The Hengdian Group, a large private enterprise in Zhejiang province, resumed production in two of its factories in February after bringing employees from a subsidiary company — Hengdian World Studios, the world's largest film and television production site that doubles as a sprawling theme park — to work on the assembly lines. Employees who used to sell tickets at the theme park are now sorting and packing Hengdian's magnetic and lighting goods.

According to Chinese state media, over 1,000 studio workers were temporarily hired to help with factory production, including to Apeloa Pharmaceuticals, another Hengdian subsidiary. But when reached by phone, an Apeloa administrator told NPR that hadn't happened.

"It would take too long to train" studio workers, he explained, "because they are unskilled and unsuitable for the technical tasks required in our factory lines."

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SCOTT SIMON, HOST:

Eighteen years ago, the United States led a NATO force into Afghanistan to topple the rule of the Taliban. It came after the insurgent group refused to expel al-Qaida leaders that they were harboring in that country. Today, the United States and Taliban officials signed a deal that seeks to end U.S. involvement in Afghanistan. NPR's Diaa Hadid is in Qatar where the signing took place.

Diaa, thanks so much for being with us.

DIAA HADID, BYLINE: Thank you.

SIMON: Who signed and what's in the deal?

HADID: Right. U.S. envoy Zalmay Khalilzad, signed the deal alongside Bin Laden, (unintelligible) brother who was leading the Taliban delegation. It wasn't a long agreement. It's about four pages long. And as I signed it, dozens of Taliban members who were watching the ceremony shouted (speaking Non-English language) or God is great. Now what the deal entails is that all forces, American and NATO troops, should be leaving within the next 14 months.

In the immediate future, they expect to have a drawdown of American forces, about 4,000 will withdraw, leaving 18,600 in the country. And that's expected to happen within the first 135 days. The NATO forces are expected to mirror that. Meanwhile, the Afghan government will release about 5,000 Taliban prisoners they are holding in exchange for about 1,000 Afghan security forces who are being held by the Taliban. That's meant to be as a goodwill gesture. And the in the deal, the United States will review its sanctions on Taliban members and says it will lift them by late August. And when negotiations begin between Afghans, they'll work with the United Nations Security Council to try to lift global sanctions. Now, all this is Taliban on a fairly simple premise, that the Taliban will not allow militant groups or terrorists to use Afghan soil to threaten the United States or its allies. So basically, after 18 years and tens of thousands of people being killed, including thousands of American forces, this deal does what the Americans had asked the Taliban to do 19 years ago.

SIMON: Is it feasible to have all U.S. troops out in 14 months?

HADID: We have - they - the United States officials, apparently they say so. And again, they condition this on the Taliban, agreeing to this condition of not allowing militants to their soil to threaten the security, the United States or its allies. And that, you know, united - the Secretary of State, Mike Pompeo, when he was speaking, he had this to say...

(SOUNDBITE OF ARCHIVED RECORDING)

MIKE POMPEO: We will closely watch the Taliban's compliance with their commitments and calibrate the pace of our withdrawal to their actions. This is how we will ensure that Afghanistan never again serves as a base for international terrorists.

HADID: And he also urged the Taliban to remember that the Afghanistan that exists today isn't the Afghanistan of 20 years ago. And he asked them to embrace the progress that had been achieved by women, in particular.

SIMON: And there's a political track, isn't there?

HADID: Yeah, and this is the key part, because this is the part will seek to end 40 years of conflict in Afghanistan. So the United States worth committing to help facilitate this prisoner swap between Afghans and the Taliban, but then into Afghan negotiations eventually begin. They're expected around early March. They'll most likely take place in Oslo, although that hasn't been decided yet. And it will be between the Taliban and a delegation led by the Afghan president, Ashraf Ghani. But we're still waiting to hear who'll be on their team. And that's when all the tricky details will come into play, whether the Taliban will agree to a democratic system and whether the government will agree to Taliban demands that we can - that we've been hearing so far that the country be governed by an even harsher version of Islamic law than the one that already exists in the country.

SIMON: NPR's Diaa Hadid in Qatar.

Thanks so much for being with us.

HADID: You're welcome.

Thank you.

SIMON: You're listening to NPR News. Transcript provided by NPR, Copyright NPR.