As the global coronavirus crisis continues to evolve, the place where the virus started is facing catastrophic economic realities due to the spread of it, according to The Wall Street Journal.
The economic downturn in China has been sudden and dramatic, and many businesses must lay off workers, put them on furloughs or even simply shut down operations all together.
The CEO of consulting firm China-America Commodity Data Analytics, Jim Huang, said he was forced to let go 18 of his 20 employees in Wuhan, where the virus was first identified, because he simply couldn’t run a business in the midst of a government quarantine.
Many of his clients couldn’t even get to him anyway. Huang, an American citizen who is waiting out the epidemic in the U.S., said he’s considering moving back to the U.S. and buying a farm.
“I believe we have already entered into a recession,” he said. “If things get better, cool. If not, I’ll start a new chapter of my life here.”
An online used-car dealer called Uxin has over 12,000 employees and had to furlough staff in March and cut salaries. It cited “difficulty in operations.”
The company said it performed a “series of measures to quickly adapt business for long-term growth,” and was “enacting a temporary workload-based staffing program” to keep costs down.
Only about 30 percent of small and medium-sized businesses (SMBs) in China have returned to normal operations.
The cuts have a greater effect as the breaks in labor productivity and supply chains are expected to harm foreign investment.
The government doesn’t want unemployment to rise, and it has tools, like unemployment subsidies and the ability to lend credit to companies, to stem the tide.
“Every effort must be made to prevent massive layoffs, and local governments must help keep employment stable,” China’s premier Li Keqiang said.
If the epidemic is taken care of by the end of March, it could still take out 5 million jobs, said Dan Wang, an analyst at the Economist Intelligence Unit.
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