Imagine the entire population of the United States on the
move - all at once. If you can barely imagine this, then
come to China for the Spring Festival (Chinese New Year,
Feb 7) and you can witness it for yourself - 300 million
people, all going somewhere.
Now imagine the worst snowstorm to hit China in living
memory and this happening right in the middle of Spring
Festival - and you have Chinese New Year, 2008. While the
human impact is considerable and should not be understated,
the overall impact to the economy is, simply, enormous.
Aside from the obvious implications for tourism, so many
other industries are also affected - manufacturing,
auto-making and agriculture, just to name a few. In fact,
the Ministry of Civil Affairs announced on Wednesday that
the overall impact to the economy was in the order of
US$2Billion.
The eastern seaboard rarely sees snowstorms of this
magnitude and for this reason, airports, train stations,
bus stations and assorted other transport infrastructure
has struggled to cope. Large automakers like Toyota,
General Motors, Citroen and Volkswagon who locate in areas
along the eastern coast such as Shanghai, Guangzhou and
Wuhan have been directly affected. With their just-in-time
approach to inventory management, the lack of access to
suppliers has meant a number of them have had to close
temporarily. Guangzhou in Guangdong province has long
been home to Japanese automakers and this province that
borders Hong Kong has been one of the hardest hit. While
not strictly snow storms in this normally humid part of
China, the sleet and rain that have arrived in recent days
have also exacted a toll. Honda, for example, suspended
some work in its Guangzhou plant on Tuesday and closed
another plant in snowbound Wuhan, Hubei Province, on
Wednesday.
Chen Xiwen, deputy director of the Communist Party's
financial affairs team announced pubclicly that the effect
on fresh produce supplies in some parts of the country has
been a disaster. Just when prices at market for fresh
produce is at an all time high, this must only further
exacerbate already upward moving inflation.
Power outages are becoming more commonplace in some of the
bigger cities, as the drain on power due to the cold
weather becomes more intense. Even the stock market was
feeling the effect of the cold weather. The Shanghai Index
dropped more than 7% on Monday, moved lower by the concerns
investors had over the way particular stocks would be
affected by the poor weather. Transport and power stocks
were particularly badly affected.
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Tim Lyons is Executive Director of Manage China. Manage
China is a company that helps foreign firms who are
interested in doing business in China.
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