We still don’t know if the coronavirus epidemic is slowing in China–the latest report shows deaths in China up 105 to 1,770 and the official number of cases climbing in mainland China to 70,548. Hubei province has reported 1,933 new cases, up from 1,843 the day before. And social media posts that make their way through China’s censors suggest that the local government is doing everything it can to suppress any information–including reports on rising case numbers?–that it thinks might set off a panic–or reflect badly on local officials.
But we do know that the government in Beijing has slapped a draconian quarantine on about 760 million people. The campaign is a Mao-style grass roots mobilization that has empowered neighborhood watch groups, uniformed volunteers, and representatives of the Communist Party to enforce the quarantine and to decide pretty much on their own about the rules of the quarantine. We know how this will work out from past grass roots campaigns. These local watch groups and volunteers will move forcefully and erratically to impose wildly varying levels of quarantine in buildings and neighborhoods under their control. And, again if past experience is any guide, these watch groups and volunteers will be fired with patriotic zeal that will push the quarantine into ever more extreme conditions.
On Sunday the New York Times reported cases in what President Xi Jinping has called an all-out “people’s war” of neighborhoods that allow only one person per family to leave a house on every other day. In Zhejiang, home to Alibaba, local watch officials have refused people entry to their own apartments when they returned from out of town unless they could produce documents from landlords and employers. The city of Hangzhou has barred pharmacies from selling analgesics so that people with headaches or fever will be forced to go to a hospital. In Hunan province police raided a mahjong parlor because more than 20 people were playing the game and that constituted, in their estimation, a crowd that could spread the disease.
You might imagine that all those rules–some of them just plain made up on the spot by local watch groups–might slow the return of workers to their places of work and restrict the ability of factories to resume production. And you’d be right.
How slow the slowdown will be or how long it might last are, of course, open questions.
But…
Today, Digitimes Research is reporting that while notebook ODMs (original design manufacturers that design and then produce a product that is sold under another company’s brand) have resumed production in China, they are predicting the possibility of a oomponent shortage starting in March if workers at suppliers in China don’t return to work relatively soon because of the coronavirus. Digitimes raised its projection of a first quarter plunge in global notebook shipments to 29%-36% from an earlier 17%. China accounts for more than 90% of global notebook production.
Please note that these projections are still talking about collapsing supply in the first quarter. The current Wall Street consensus continues to see the coronavirus as a first quarter problem. Watch out if investors start to see forecasts for second quarter declines.
