Starting From Both Ends Of Supply And Demand To Solve The Mask Dilemma

With the resumption of work nationwide in February 10th, it is necessary to take necessary control measures at the demand and supply side to avoid a more serious problem of masks.

In order to alleviate the shortage of medical supplies in Wuhan and Hubei, governments at all levels, charities and caring people are working hard to raise medical supplies from all over the world and to the epidemic areas. But today, some medical supplies are still in short supply, of which masks are the most scarce material in all front-line medical consumables. From the existing supply and demand relationship, in the next period of time, masks are a scarce material.

Why is masks even more important than other important medical products including protective clothing? After all, the protective clothing seems to be smaller and appears to be more scarce. But in the actual fight against epidemic situation, most ordinary people do not need protective clothing, and will not conflict with the demand for health care workers. Masks are the daily needs of everyone in the spread of the epidemic, and the resumption of work is coming soon after the Spring Festival. After February 10th, with the gradual resumption of work across the country, the consumption of masks will be greater for hundreds of millions of ordinary people.

Therefore, the necessary regulation and control measures should be taken from the demand and supply side, so as to avoid a more serious problem of masks.

Supply side: the most optimistic estimate is that China can get 20 million masks a day.

Why is masks so tight? A simple arithmetic problem: supply and demand.

According to the data disclosed by the Ministry of industry and information, China's largest respirator production capacity is 20 million per day, while China's mask production capacity is half the world's total, that is, the world apart from China, there are 20 million production capacity per day.

First look at the country. Similarly, according to the data of the Ministry of industry and information technology, the productivity of China masks was 8 million per day (equivalent to 40% capacity utilization) in January 29th. In February 2nd, it has reached 12 million (equivalent to 60% capacity utilization) per day. Why is there only such a low capacity utilization rate? Apart from raw material supply, transportation and logistics problems, workers should not be the biggest problem.

Why are the workers not enough? First, at present, it is the infective period of the new crown virus, and the workers are also human beings. They are not inclined to take the risk of infection and go out to work. Second, the traffic in most provinces has been highly regulated, and the workers who have returned home are faced with great practical obstacles even if they want to return to the factory. According to media reports, in many places, even if some enterprises have reached five times the daily salary of more than 700-800 yuan, they can not assemble enough workers to return to production.

According to a number of media reports, the government has taken over the main factories and production capacity of medical protective materials nationwide. We tentatively assume that the government can partly solve the problem of capacity utilization within a few days (how to solve it in detail), and then we will achieve 15 million mask production capacity in February.

Look at the foreign countries again. The question here is how can we maximize the utilization of 20 million masks per day in foreign countries. After the WHO (WHO) is listed as PHEIC (international public health emergencies), some countries have stopped exporting masks to China. One reason is that these countries themselves have imported new crowns. The demand for masks in China is increasing rapidly. Another reason is the process impact of WHO's PHEIC on personnel exchanges, international trade and customs clearance.

Although China has imported about 56000000 masks (8 million per day) from the world in the past week, according to the General Administration of customs, these imports are more about purchasing existing stocks rather than new ones.

So in the foreseeable future, it will be difficult for China to make full use of overseas 20 million masks' daily capacity. The most optimistic estimate is that if we can import 5 million masks per day from abroad and 15 million domestic ones, China can get 20 million new masks per day. If you take this optimistic situation to a discount, there may actually be only 1000-1500, at least in February.

Demand side: conservative estimates that China consumes 1000-1500 masks a day.

We divide the demand for respirators into three categories: health care workers, maintenance personnel of the national economy and the people's livelihood (policing, logistics, infrastructure, etc.) and the general public.

First, health care workers. According to the mayor of Wuhan, there are 60 thousand health care workers in Wuhan, with an average of 5 masks per day, which is 300 thousand masks per day. According to the proportion of the population, there should be about 300 thousand of the medical staff in Hubei in other areas, assuming that 3 masks per person per day, that is, close to 1 million masks.

Similarly, according to the proportion of the population, the rest of the country assumes that about 400-700 000 health care workers are currently working, with an average of 0.5 masks per day, or 200-350 masks. 300 thousand in Wuhan plus 1 million in other parts of Hubei and 200-350 in the rest of the country, which consumes 400-500 or so of masks.

Second, "national economy and people's livelihood" to maintain personnel. These include police, municipal management, logistics management, transportation hub management, hydropower, coal and telecommunications infrastructure management, safeguard the livelihood of the retail industry and other "related to the national economy and people's livelihood" key positions.

Suppose that there are 10 million people in the country (less than 1% of the total population) who need to work every day, and use 1 masks every three days, that is, the consumption of masks per day of about 300-400 000 per day.

Third, the general public. In the big number, it is very simple. There are 1 billion 300 million people in the country. Apart from those who maintain posts in health care and municipal services, most ordinary people seldom go out at home.

We are extremely conservative, assuming that only 1/10 of the people in the country respond to the call of the state to wear masks (most people in rural areas do not wear masks or wear masks), that is, 130 million people, an average of 3 persons per household, that is, 40 million people are wearing masks, and every household has only one mask per 7-10 days, which means the consumption of 400-600 masks per day.

The above projections are rather rough, and there is not much data support. However, it is also very difficult to accurately calculate the above figures when the epidemic situation, public sentiment and supply and demand are changing every day.

If we use this simple calculation, the total daily mask consumption in China is 400-500 000 per day for medical staff and 300-400 000 for municipal maintenance personnel + 400-600 000 for ordinary people = 1000-1500.

To sum up the above analysis, if we compare the supply of masks in the country (1000-1500 per day) and demand (1000-1500 per day), we will see that masks are indeed in a "tight balance" state. And because of the existence of production and logistics cycles, hospitals and health stations with rapidly deplete Chinese medicine resources in many parts of the region, especially those with serious epidemics, are likely to be in short supply of masks.

All of the above analysis is based on the fact that most ordinary citizens are still at home and seldom go out.

A new turning point in supply and demand balance: in February 10th, the country resumed work in succession.

After February 10th, most provinces will be resumed (currently 21 provinces have announced plans, 20 of which are resumed after February 10th), and at that point, the most important factor in the balance of supply and demand of masks will be broken.

1 billion 300 million people in the country, even with the most conservative assumptions, ten percent, that is, 130 million people respond to the call to wear masks, and these people are very economical. The frequency of changing masks is very low, assuming that each person wears only one mask every 3 days, which means that the average daily mask consumption of the average person is 40 million. This figure alone does not meet the needs of health care workers. It has exceeded the total daily mask production capacity (1000-1500 000). This means that soon after, we will fall into the situation of systemic supply and demand of masks.

How to break the situation? In order to solve the problem of masks shortage, we must look for possible breakthroughs from two aspects of supply and demand.

Breakthrough of supply side: government intervention, financial subsidies and personnel replenish

In view of the fact that the government has taken over most of the masks in the country, the market means of using price signals to guide production are no longer in existence. This is a major premise to understand the current situation of China's mask supply.

In a normal market environment, it seems that there is no need for debate between the government and the market. However, under the current situation of rapid spread of the epidemic, the government has changed the characteristics of a large number of production factors: for example, transportation, most of the provinces and cities with serious epidemic situation have already closed the city or half of the city, such as the resumption of work, according to the state regulations, most enterprises need to delay the resumption of work.

Under such circumstances, if the government does not intervene directly, it may take days or weeks for the hands of the market to find ways to circumvent these restrictions and stimulate production, and the life of the epidemic areas can not wait, so the rapid intervention of the government is inevitable. After that, the government's goal is very clear: to restore and expand production as soon as possible.

According to the Ministry of Finance disclosure, as of January 29th, the finance at all levels has invested nearly 27 billion 300 million of the funds to ensure the funds needed for epidemic prevention and control. Some of them should be directly or indirectly used to subsidize the production of medical supplies, including masks. Therefore, government intervention is a good thing to ensure the supply of masks. At least in terms of funds, the government can control the risk of short-term market failure without cost investment.

The next important question is: can the government really solve the bottleneck problem of mask supply besides investing money?

According to media reports, some ingredients of medical masks have been increased by 40% or more recently. Assuming that the price of raw materials can be overcome by financial resources, can the shortage of workers be solved?

In fact, when the epidemic becomes more serious, the less inclined workers are to go back to work in factories. In extreme cases, if the possibility of infection is 100%, no one will go out to work. If the probability is 50%, only a few people who are badly in need of money can go out to work. Of course, we can give some individual cases of "abandoning the small family to protect everyone", but these are, after all, individual cases.

Under the consideration of the total number of 3 masks and 20 million masks in the country, the shortage of workers is positively related to the severity of the epidemic. For this reason, the government can do or has done the following things:

First, use financial resources to subsidize extra wages to attract workers. This belief has already been put into practice in many places. According to the surging report, Xiantao "government departments will pay the cost to the factory and will not let us suffer."

Second, the government directly sends people to participate in production. In Wuhan, Shanghai and Quzhou, civil servants, urban management and volunteers are directly involved in the production of masks.

The essence of the first method is to increase incentives and attract labor, and to be partial to market. The essence of the second method is direct intervention by the government and partial planning.

If these two methods can not supplement enough labor force, do we have third ways?

For example, let the armed police or the army or other countries directly dispatched personnel directly participate in the production, or a more systematic mobilization way to organize human resources to participate in the mask production. This ensures faster and more stable labor supply.

Demand side breakthrough: improving logistics and reducing pedestrian flow

The premise of the demand side is that in view of the fact that the domestic mask production capacity is basically taken over by the government, the factory masks will almost be directly requisitioned by the government. The distribution of the masks will not follow the laws of the market and the price laws. The government will send most of the masks to the epidemic area of Hubei, and the number of masks left to the non affected areas will be reduced to the minimum.

In this case, even if the retail price of the mask is released, there will not be any mask flowing into the non epidemic area through market channels except for some very small capacity. So the mask supply in most parts of the country will maintain a very tense situation.

We can make such projections, of course, the health system can also be calculated. Therefore, in the past few days, some media experts have begun to appeal, ordinary people do not need to wear masks or frequent masks. This is obviously aimed at reducing the demand for masks for ordinary people, at least psychological needs.

However, if the purchasing demand of masks is divided into actual needs and psychological components, the general public should be divided into practical needs. The appeal of experts can reduce psychological components to a certain extent, but it is difficult to change the actual demand.

To put it simply, a white-collar worker who has gone back to work still needs to wear masks and masks in the subway, bus and office. This very practical demand will not be reduced.

At the same time, the government also wants people to wear masks as much as possible in these public places. After all, the source of infection in most provinces has not yet been completely removed, and no one can shoulder the risk of continued sexual transmission. In this sense, the actual demand is also "must demand".

How to reduce the actual demand for mask? There are two possible paths.

First, in areas where the epidemic is more serious, compulsory enterprises should not return to work in advance and provide financial subsidies.

This path involves a simple and practical problem: for many enterprises, failure to return to work means loss immediately. According to media reports, Xibei, a catering company, can only stay for three months if it maintains the current cash flow situation. This is not a case. If most enterprises do not operate, and the fixed costs of wages and rents still need to be paid as usual, there will be enormous pressure of cash flow.

Many enterprises and Xibei's offline retail enterprises are different: even if they can return to work today, Xibei will not be able to consume, because the epidemic directly leads to most people do not want to eat in public places such as restaurants. If most enterprises can get back to work earlier, their business can still be carried out normally, such as manufacturing, logistics, agriculture, trade, consulting services and other industries.

These offline retailers will have a strong tendency to get employees back to work ahead of schedule. In these enterprises, in addition to some posts can be telecommuting, most of the posts still need employees' on-the-job posts, which will bring pressure on employees to resume work ahead of schedule.

In order to alleviate this pressure, the government departments have two choices theoretically: first, reduce the enterprises' delay in resuming work; and two, increase the cost of early recovery.

The two options are logically identical, but the former is a positive incentive, while the latter is a negative incentive. Under the pressure of the overall operation of the enterprises affected by the epidemic, the resistance of the former will be much smaller, and it will also be in line with the current macroeconomic easing and stimulation.

Specifically, how to reduce the loss of enterprises to postpone the resumption of work? The government can indirectly provide subsidies through the way of tax relief, which does not involve direct expenditure of financial resources, so it will not cause short-term pressure on governments at all levels.

Next, how do we decide to subsidize every business? Similarly, the government can provide a basis for the daily allowance according to the annual revenue from the tax statements provided by the enterprise last year.

What we need to pay attention to is that the government should pay more attention to employee intensive enterprises, such as manufacturing and service industries. As soon as possible, it will be an important starting point to block the source of infection and reduce the consumption pressure of masks.

Of course, this involves a lot of implementation details and complexity, but it is indeed a way of thinking that can be used as a starting point. Different regions and industries can also formulate specific and flexible policies according to the actual situation.

Second, organize social forces as far as possible to provide door-to-door transport and logistics services, especially in epidemic areas.

At present, except Wuhan, Huanggang, Wenzhou and Hangzhou have issued orders restricting residents to go out. They can send 1 people out to buy every two days, and no one can go out. Following other serious epidemic cities follow up the policy is also a probability event.

With the implementation of this policy, if people's demand for goods and services can be solved by door-to-door, the demand for going out will be further lowered, and the consumption of mask will be further lowered.

The consumption of masks will be lower if unified door-to-door service or logistics transportation is carried out. For example, one person can send 100 dishes to a few communities for a day, which may only consume a mask. If these 100 people have a person to go out to buy vegetables, even if they buy 10 dishes to replace a mask, they need to consume 10 masks. So special door-to-door will greatly save the consumption of mask.

After years of accumulation, such as Jingdong, box horse, Ding Dong, starving, American League and other Internet platforms have already established ready-made logistics distribution system and perfect management system in most cities. The difficulty of expanding scale should be relatively low. This is the time to give full play to these infrastructure advantages.

Of course, the current number of distribution personnel on these platforms is not enough to support the door-to-door needs of nationalized people. If we want to implement large-scale on-site service in some cities systematically, we must recruit new personnel or volunteers with higher wages, and the local government departments should provide wage subsidies or manpower assistance as soon as possible.

The return time for most provinces is another week in February 10th. By then, if the epidemic has not been reversed, the tight balance between supply and demand of masks will probably be broken, or even a shortage of national masks. No matter from the angle of epidemic prevention and control, or from the perspective of social and public sentiment, this is not a good thing.

The campaign on masks has left us little time. In the normal policy environment, we have more time to consider the countermeasures, but under the pressure of the spread of the epidemic, all decisions must be decisive and rapid.