Who Announced The New Crown Epidemic As "International Health Emergencies", What Is The Impact Of The Spinning And Weaving Industry?

Thursday evening local time (Beijing time on the morning of January 31st). WHO (WHO) held a news conference in Geneva, Switzerland. WHO director general Tan taisai announced that the new coronavirus outbreak constitutes a public health emergencies of international concern. The English version is PHEIC (Public Health Emergencyof International Concern). But at the same time, he said WHO had high confidence in China's response. It was not because the epidemic occurred in China, but because of the protection of those countries that were less responsive. At the same time, WHO is opposed to any country's travel and trade restrictions on China.

Earlier, on ~23 January 22nd, Tan Desai, director general of WHO (WHO), held a meeting on the convening of emergencies in China according to the international health regulations (2005) to discuss whether the outbreak of new coronavirus in China and its surrounding countries constituted "public health emergencies with international concern".

In January 24th, 16 World Health Organization experts from 14 countries, including China, Brazil, Thailand, the United States and Russia, voted to announce that China's epidemic has not yet constituted "public health emergencies of international concern". But the committee members are divided.

Tan Desai also said on twitter in January 29th that he was deeply sorry for the assessment of the risk of global new crown virus in January 24th as "medium". "I have repeatedly stressed that the risk level should be high risk."

What happens if you are identified as PHEIC?

After determining PHEIC, the WHO will issue a provisional proposal, including health measures to be taken by all countries for personnel, goods and vehicles. Coordinate global manpower and material resources, and give PHEIC guidance and assistance when necessary. Therefore, WHO will not use the concept of "epidemic country" in the conference. According to the definition of WHO official website, there is no time limit for PHEIC status.

In fact, according to the experience of announcing the PHEIC several times before, the time limit is determined according to the control situation of the specific epidemic situation, that is, WHO will announce whether to cancel the state of PHEIC, rather than to stipulate a period of 3 months or 3 years at the beginning. It must be pointed out that the announcement of PHEIC on the world health organization does not authorize the international community to impose any mandatory intervention against the epidemic countries. The recommendations given by the World Health Organization are not mandatory even if they relate to tourism and trade related restrictions.

The trouble is that if PHEIC is identified, Chinese products will face additional quarantine at the time of export. This will only increase export costs and reduce efficiency, but trade will not be terminated. Whether other countries will trade with China and whether it will restrict Chinese travel depends entirely on the judgement of the severity of your epidemic, rather than whether it is declared PHEIC. Even if PHEIC has not been announced, countries have already begun to take action against China, such as the withdrawal of overseas Chinese from the United States, Japan and France. So we don't have to worry about that.

How does this decision affect our country?

The most obvious impact is transnational tourism and international trade. Although some countries have taken measures to evacuate their citizens and restrict flights to China before the announcement of PHEIC by the World Health Organization, the nature of who will make more countries aware of the risk of the outbreak and make decisions to reduce tourism and trade.

For the domestic macro-economy, it will cause short-term external shocks. A country's economy will consist of consumption, investment and net exports. The impact on transnational activities such as trade and tourism will directly exert negative pressure on net exports. Domestic consumption and investment will also be impacted by the development of the epidemic itself. The three parts will face many challenges. The impact of WHO on the macro is external and short-term. In essence, whether it is investment or consumption or net exports, the fundamental influence variable lies in the development of the epidemic itself. The decision of the World Health Organization only describes the current situation of the epidemic, and does not essentially change the development pattern of the epidemic.

In the long run, the magnitude of the impact of China's economy depends on the development trend of the epidemic itself and the counter cyclical adjustment policy we have adopted to counter the impact of the epidemic. The impact of the epidemic on the market is divided into three aspects: changing people's expectations of the real economy; changing people's expectations of counter cyclical adjustment policies; changing market sentiment and trading structure. WHO announces that PHEIC will strengthen short-term market risk aversion, but does not change the logic of market development.

Review on the impact of SARS on China's economic development in 2003

Impact on retail consumption of the year

In 2003, the epidemic's drag on social consumption was more obvious, mainly concentrated in the 2003 second quarter, with the greatest impact in May. On the other hand, after the outbreak subsided, the recovery rate of consumption was very fast, and reached a new high in 2004.

Judging from the performance of all types of retail products above quota, the upward trend of the situation during the epidemic period includes: Chinese and Western medicines, daily necessities, Cereals, oils, foodstuffs, beverages, tobacco and alcoholic drinks, building and decoration materials, and the major drop in range are clothing, shoes, hats, knitwear, textiles, sports, entertainment products, stationery and office supplies, but after the outbreak, they have recovered to a higher level even before the epidemic.

The impact of SARS on foreign trade in that year

From the cumulative year-on-year rise in the export value (US dollar valuation), exports of goods nationwide in 2003 were not significantly affected by the epidemic. The cumulative growth rate throughout the year has been fluctuating narrowly between 32%-35%, but the epidemic still has a regional impact on exports. Take Guangdong Province as an example, as the first place and key area of the epidemic, the turnover of Canton Fair in April 2003 dropped by 74% compared with the same period in October. The Canton Fair in October rebounded to an increase of 11% over the same period last year, and a further increase of 455% in April.

The import growth rate showed a trend of downward trend throughout the year, which was partly related to the gradual increase of the base. However, the rate of decline in the first half of the year was faster, which may be related to the domestic demand of the epidemic.

On the whole, the domestic demand of the epidemic has a slight impact on imports, but has not had a substantial impact on exports. Export activities outside the key areas of the epidemic are not affected.

What's the impact on the textile and garment industry?

Enterprises resumed or affected

A few days ago, due to the serious spread of the epidemic, the Suzhou Epidemic Prevention Command Headquarters issued a notice that all kinds of enterprises could not resume work as early as 24 o'clock in February 9th. Textile enterprises responded to the call. Textile enterprises in Shengze, Keqiao, Changxin, Guangzhou, Nantong, Fujian and other places sent notice of delayed start in succession, and resumed work after the first month of fifteen.

Even if enterprises start to resume work after a year, the spread of the epidemic will be extensive, and the sensitive time points of Spring Festival will be added. Workers will come back later. Even if they come back, they will have to isolate themselves for 14 days at home according to the regulations. For textile enterprises, the starting rate will be greatly affected, and the production schedule will be slow. The textile market quotation is generally the same before last year. The probability of "gold three silver four" coming is not great.

Polyester market or affected

Crude oil fell: The spread and spread of the new coronavirus epidemic in China has opened the curtain on the fall in international oil prices. Starting from the 23 day of Wuhan's closure of the city, the decline in international oil prices rapidly widened to four days in excess of 1 US dollars per barrel per day. On the 28 day, the international oil price dropped to the lowest price in more than three months. This is the first time in the history of crude oil that oil prices have collapsed due to China's epidemic. As China is the world's second largest consumer of crude oil, the stagflation caused by the epidemic will weaken the demand for energy, triggering the market's worries about the demand for crude oil and promoting the fall in oil prices. The epidemic was classified as PHEIC, which further dragged down China's demand for crude oil market.

PTA has little influence: The impact of the pneumonia incident on the polyester industry chain is viewed from the upstream and downstream perspectives: as the more terminals go, the more labor intensive enterprises are, the upstream polyester, PTA and so on are all large-scale intensive production, and the supply angle is very small.

Polyester price will be limited. Polyester filament is most direct for the market of weaving, and the price of polyester filament has been dropping continuously in 2019. However, as a result of this event, the downstream weaving market will be affected more clearly by starting, production and demand. The price of polyester filament will be restrained after years of operation, and production and marketing may not be good enough.

Foreign trade exports or affected

A country's economy consists of consumption, investment and net exports, and its impact on transnational activities such as trade and tourism will directly exert negative pressure on net exports. 250 billion years ago, the Sino US trade signed the first stage economic and trade agreement to let textile enterprises have confidence in the export situation after the beginning of the year. However, the United States still maintains a 25% tariff on China's imports of about US $25% and maintains a 7.5% tariff on China's imports of about $120 billion. In addition, the two parties have reached a consensus on China's containment, and Sino US trade frictions are still repeated. But now the new coronavirus epidemic is classified as PHEIC, the economic downward pressure is greater, the external environment is worse, and after the start of the business, the export will be largely blocked.

Once the epidemic is out of control, China's exports will be regarded as the products of the epidemic area, and will be rejected by the world market. The confidence of foreign investors in China will be greatly compromised, and the negative impact on the country will far exceed the impact of Sino US trade war.

So, whether for China or the world, the WHO qualitative meeting will be a double-edged sword.

It is foreseeable that port authorities around the world will adopt reports and quarantine measures to prevent disease from spreading on ships previously docked in the epidemic areas.

In this case, the quarantine risk may cause the shipowners not to stop at the contracted port. Under the worst epidemic situation, it is possible to close the port. In addition, the industry is also appealed for foreign trade friends, if any foreign customers ask about the epidemic situation in China, please be cautious to reply, do not expand!

How to view the future development of textile and garment industry

It is estimated that the potential impact of the new pneumonia on the national economy in 2020 can be learned from the economic impact of SARS on 2003.

• The economic growth in the outbreak period will be obviously dragged down. The first, second and third industries will be affected. The end of the epidemic will increase the growth of the second industry and the recovery time of the third industries will be longer. From the demand side, the epidemic will cause a greater impact on retail consumption, and the total retail sales and imports of consumer goods will be affected, but the repair after the outbreak is also very fast. The impact on investment is not significant and the impact on exports is not significant, but the premise is that there is no overall outbreak of the epidemic in major export areas. In terms of inflation, the price trend of industrial products is weak due to the weakening of industrial production demand. Food prices and most of the non food prices are not affected, and the prices of health-related consumer goods have risen to varying degrees.
• In contrast to 2020 and 2003, the fundamentals of the economy are in a short period of upward trend. Therefore, in the original case, we expect economic stability to stabilize and superimpose the policy of steady growth, and the actual GDP growth rate in the first quarter of 2020 is expected to be flat or slightly higher than the fourth quarter of 2019. In 2003, the actual GDP growth rate in the two quarter of the outbreak dropped from 11.1% in the 1 quarter to 9.1%, which is the same as that in the four quarter of 2002. If the epidemic can not be effectively controlled in the short term, the endogenous driving force of economic stabilization may be affected by the potential impact of the epidemic on consumption and production, and the actual GDP growth rate in the first quarter will break 6. The actual GDP growth in the first quarter can be maintained at more than 6%, depending on the strength of the policy of steady growth, especially on investment projects. Short term monetary policy has little to do with the epidemic, but if the epidemic continues to affect the economy, the easing period of monetary policy beyond the fundamentals will probably be extended since the beginning of the year.
• Although the outbreak was also launched in December of last year, the time that attracted widespread attention was relatively early. The superposition of the Spring Festival earlier this year. If the epidemic is not alleviated for a short period of time, taking into account the factors such as lagging behind and reworking, the probability of the real economy will begin to show up in the 1 quarter. Due to the dislocation of the Spring Festival, this year's data should be weaker in January and the data in February will be stronger. But if there is a long delay in reworking after the holidays, the data may not improve significantly in February. The trend of follow-up depends on the evolution of the epidemic situation. If the epidemic is basically controlled in the 2 quarter, the first quarter's consumption and production plans may result in a big rebound in the 2 quarter.
• The epidemic is not the leading factor in the current CPI, but if the policy of steady growth is not enough, the rebound of PPI will probably be suspended. Exports still depend fundamentally on external demand, that is, the fundamentals of the global economy. If the epidemic is not widely spread to major export areas (Zhejiang, Guangdong, Jiangsu, etc.) in the short run, it is expected that the short-term impact on exports will be small.

Don't be pessimistic.

The Chinese government has the ability to control the epidemic rapidly.

It is not a good thing for WHO to characterize the epidemic of new coronavirus in China as PHEIC, but you should not exaggerate its impact. This announcement also has some positive effects, such as strengthening international cooperation, increasing the international community's assistance to China, and so on, as well as controlling the epidemic situation. We should not be overly pessimistic about the adverse impact of the SARS epidemic on China's economy. This is because the Chinese government has strong governance capacity on the one hand, and on the other hand, has enough policy space to deal with the negative impact of SARS on economic growth.

First, the response speed and responsiveness of the Chinese government to cope with pneumonia is faster than that of the SARS epidemic in 2003. With the lessons learned from SARS, the response speed and response measures of the Chinese government to this pneumonia epidemic situation should be very timely and correct, and this has also been recognized worldwide.

Second, it is not hard to predict that the Chinese government will adopt a more expansionary counter cyclical macroeconomic policy in 2020. In terms of fiscal policy, the central government of China still has ample financial space. The Chinese government will invest more financial resources in areas such as public health care, labor re employment training, enterprise tax reduction and fee reduction to ease the downward pressure on China's economy.

Once again, considering the pressure of systemic financial risk prevention and control, the Chinese government will not overreact to the negative impact of this pneumonia epidemic. For example, deleveraging, risk control and strong supervision measures against financial institutions will not be fundamentally relaxed. According to the relevant people, even if considering the adverse impact of the SARS, China's economic growth will not fall off in 2020 when the Chinese government is in a timely manner to deal with and deal with it. China's economic growth may show a trend of low and high growth in 2020.

Ultimately, the development of the epidemic itself determines everything. According to the who rules, the default period of PHEIC is 3 months, expires automatically, and can be lifted in advance. Therefore, how long the PHEIC can last is mainly controlled by epidemic situation. Therefore, we must do our best at present. Do not add chaos to the government and the country.

Related links

Several key concepts need to be clarified.

About WHO

Who is not the concept of a sovereign state. It is more reminders and suggestions to Member States, and operates in collaboration with the relevant regulations of the World Health Organization. As to whether member states follow the recommendations of who, then sovereign states have their final discretion. Therefore, the resolution of the world health organization cannot be regarded as a "order" similar to that of a sovereign state. This is the basic premise.

About PHEIC and "epidemic area"

This is entirely the two concept. The former is a qualitative nature of who related to a major public health event, and the latter is a definition of some areas with high risk of the event. The announcement of the new coronavirus outbreak is PHEIC, which does not mean to define China as an epidemic country. In fact, the definition of "epidemic area" is consistent with the basic facts of the epidemic.

PHEIC surviving

Once an event is declared PHEIC, its default period is 3 months, and the expiration date automatically fails and needs to be reassessed. Who can also re evaluate the situation three months ago, cancel or modify the nature of the related events.

The outbreak of the epidemic is fierce. Our textile industry has launched a practical campaign to support the fight against epidemic diseases in order to support the winning of the epidemic prevention and control. It not only completes the material guarantee work for the prevention and control front-line, but also unconditionally follows the national policy to meet the needs of epidemic prevention and control. We hope that textile enterprises can treat the epidemic objectively and rationally, make various defensive plans ahead of time, adjust the company strategy in time, and make preparations for all contingency situations ahead of schedule. Welcome to pay more attention to more information about "global textile net", pay attention to epidemic situation, and pay attention to the latest development of textile industry.