As they walk on a tightrope between containing a virus that has killed more than 2,600 people and preventing a slump in the world’s second-largest economy, central and local governments in China are loosening the criteria for factories to resume operations.
While the government is trying to get people back to work, they risk endangering a greater number of the population if the coronavirus (COVID-19) spread any further.
The rush to restart the factories has been pushed by China’s leader Xi Jinping and top leaders, who are urging companies to resume production so the country can continue to meet lofty goals for growth and economic development in 2020.
Officials in China’s provinces have taken up Xi’s call, with one region after another relaxing rules that had kept more than half the nation’s industrial base idle following the Lunar New Year holiday.
After weeks of empty streets and shuttered shops, signs of life are emerging along the manufacturing belt in the country’s coastal regions.
About 600km east of the virus epicentre of Wuhan, vendors and customers at the Yiwu wholesale market in Zhejiang province are having their body temperature tested at the entrances after the vast complex that wholesales manufactured goods reopened on Tuesday, three days earlier than expected.
Power demand has also started to pick up in China, with six major generators reporting that coal consumption – while still below pre-holiday levels – rose 07% on February 20 from the previous day.
But labour is still a big issue for many as many of the workers are stuck in the provinces, restricted in their movement.
“Our factory is still missing quite a lot of workers, so we can only resume limited production,” said Dong Liu, vice president of a textile manufacturer in Fujian, southeastern China, that employs more than 400 workers.
Dong said he applied to the government on February 17 to restart and the inspector came the next day and gave permission.
“More and more factories are allowed to reopen this week,” he said.
The push to get production rolling again risks a renewed spread of the virus, about which much is still not yet known.
While more than 79,000 people have been infected worldwide, over 90% of those cases are in seven Chinese provinces, and mostly in the central province of Hubei, where restrictions on movement were imposed in a number of cities, but not before a lot of people had already left the region for the New Year break.
“A peak may come at the end of this month for the whole country but it won’t necessarily indicate a turning point,” Zhong Nanshan, a respiratory disease expert who led research into a treatment for Sars, told reporters in Guangzhou earlier this week.
Official statistics showed that around 70% of plants in provinces such as Shandong, Zhejiang and Jiangsu have now restarted, though most are running below capacity with as many as half their workers still missing.
In Hunan, the province just south of Hubei, the restart rate was only 46% on February 17 with fewer than a third of staff returning.
Cities that rely heavily on manufacturing such as Dongguan and Zhongshan are now saying they won’t require workers to be quarantined as long as they are healthy, and factories that meet new safety rules don’t need to wait for government approval to resume.
“It is extremely important to get factories back to operate at their normal capacity, otherwise, it will hurt workers’ wages, companies’ cash flows, and therefore external exports,” said Iris Pang, an economist with ING Bank NV in Hong Kong.
In Dongguan, a key manufacturing city in the Pearl River Delta, a government document sighted by Bloomberg requires manufacturers to carry out a checklist to ensure facilities are clean and staff are healthy.
Plants can then restart after posting notices of resumption inside and outside the plant. The document warns that the companies are responsible for handling significant risks to controlling the virus and may face punishment if they fail to do so. Healthy workers with a temperature lower than 37.3 Celsius from outside Hubei and other badly affected regions can work immediately after they return to Dongguan.
But granting permission to restart is only the first hurdle in getting back to full production. Workers from heavily infected areas are still barred from returning to work in big industrial cities. Manufacturers must also wait for suppliers to begin shipping, villages to dismantle roadblocks and transport companies to restart distribution.
Even if factories can get all their employees back to work, restrictions on work practices may mean that they aren’t able to resume full employment anyway.
In Zhenjiang, a city in Jiangsu province, an LED car lighting factory recently resumed production, but only after finally getting enough supplies to fulfil local government requirements to provide five masks per worker, along with disinfectant and protective suits.
“Every day several government departments send representatives to spot check our efforts to curb the virus,” said Melissa Shu, the company’s export manager.
“They come from the district government, the centre for disease control, the city government, at different times of day and check if we disinfect in time, whether we test the temperature of workers, whether workers have masks, whether one person has a separate lunch seat, whether lunch is properly arranged, etc, etc.”
Shu said at lunchtime, workers need to sit at least one meter apart (about three feet).
Ironically, some Chinese factories already have plenty of space, thanks to the long-running trade war with the U.S.
“Compared with the virus, that was much worse” said HuiZhuo, founder of a wooden furniture manufacturer in Zhongshan, in the Pearl River Delta.
“We’ve cut a lot of workers in the last two years – so I’m not too worried this time because the space in my factory is big enough to avoid being crowded.”
Like nearby Dongguan, the government in Zhongshan has relaxed restart rules. Zhuo has been studying the government checklist carefully, preparing sanitiser, masks and thermometers.
Factories must disinfect facilities and check workers’ temperatures every day. Each worker dormitory must delegate one person to shop for them every other day, and the others are not allowed to leave the factory. Zhuo’s confident that if he sticks to the rules, he won’t have a problem with the virus.
In the longer term, the outbreak is likely to exacerbate the damage wrought on China’s factories by the trade war. For some overseas customers in fast-moving industries like fashion, the factory shutdown amid the virus has been another wake-up call that may spur them to reduce their reliance on Chinese suppliers. (Source: The Straits Times)