China tries to restart its economy as outbreak seems to slow. But is it heading back to work too soon?

February 27, 2020, 12:11 PM UTC

This week, the iPhone and electronics manufacturer Foxconn promised its employees in China a range of perks if they would just do one thing: brave the coronavirus and come back to work.

The company is reportedly offering free transportation to and from work, complimentary meals and accommodation, and bonuses of up to $1,000 to factory workers who earn as little as $4,000 per year.

The Chinese central government, meanwhile, is dangling its own rationale for a return to work: fewer new cases of the coronavirus.

That Beijing has reported a plummeting tally of new infections in recent days could indicate the improved state of the outbreak in China, but the slowdown is so rapid that it’s stoking skepticism; experts wonder whether the falling numbers reflect reality or if it’s a helpful narrative to get China’s economy back on track.

Down for the count

The spread of coronavirus in China has all but ground to a halt in areas outside of the epicenter of Hubei Province, with five new cases confirmed on Tuesday, and 24 confirmed on Wednesday. It’s significantly slowed within Hubei’s borders, too, where 409 new coronavirus cases were confirmed on Wednesday. Those figure are markedly down from earlier in February, when China registered thousands of new cases each day.

The “numbers of reported cases are lower than what I would expect,” said professor Eugene Hung, life sciences professor at Hong Kong University of Science and Technology. Based on transmission rates of people leaving Hubei, a model Hung developed puts the number of likely infections in the hundreds of thousands. There were 78,497 official cases of coronavirus in China as of Wednesday, according to China’s National Health Commission.

Meanwhile, professor Neil Ferguson, an epidemiologist at Imperial College of London, told The Financial Times he suspects China may have only confirmed 10% of its total coronavirus infections to begin with.

There’s no question that—to some degree—Beijing manufactured the drop-off by repeatedly tweaking its method for diagnosing coronavirus infections. On Feb. 13, China reported a record of nearly 15,000 new cases in just Hubei province after authorities expanded the definition of confirmed cases to include probable ones. But China’s National Health Commission reversed that decision a week later, and new confirmed cases began falling to triple digits inside Hubei and to mere handfuls outside it.

The shifting classifications make it difficult for experts to project trends and gauge the severity of the outbreak. It is much easier to “interpret case numbers if we have a stable approach to identifying cases and testing them over time,” Benjamin Cowling, public health professor at Hong Kong University, said of the methodology change earlier this month.

It is possible that the incidence of coronavirus in China has in fact peaked amid unprecedented lockdowns and quarantine measures, Hung said. But if Beijing failed to identify some cases to begin with, the virus—and risk of its spread—could be more prevalent than official numbers indicate.

Under pressure

The upbeat figures, it’s worth noting, coincided with President Xi Jinping and central authorities taking more prominent roles in containing the outbreak, Rodney Jones of Wigram Capital Advisors told the FT. On their watch, there’s a positive story to tell.

What’s more, the trend of declining coronavirus infections bolsters Xi’s case that the country should resume work after a weeks-long hiatus aimed at stemming the outbreak. That won’t be easy. Travel restrictions remain in effect in many parts of China, limiting workers’ ability to return to their place of employment. Nevertheless, last Sunday, Xi ordered provinces with a lower risk of coronavirus to prioritize restarting production and returning to “normal life,” according to China’s state media outlet CGTN.

This decision, however, was not made because “the health situation has improved,” but rather that “the economic risks of delay have become clear,” argues Brock Silvers, managing director of Adamas Asset Management in Hong Kong.

China’s economic growth has been falling since the mid 2000s, reaching 6.1% in 2019, the lowest rate in nearly 30 years. The virus is expected to take a full percentage point off of GDP output in 2020.

“China’s economy is highly leveraged,” said Silvers, referring to the government’s mounting debt issues, which have ballooned in the wake of the U.S.-China trade war. “The pressure to re-start [it] is enormous,” said Silvers.

In addition to health experts, some pockets of the general public seem unconvinced that the coronavirus is as contained as authorities say. On Weibo, China’s version of Twitter, one user commented on the article about Foxconn encouraging workers back to the factory and asked, “Is it worth risking your life for some money?”

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