Just like the snaking Yangtze and Han rivers that cut through the city, Wuhan flows straight into the heart of China’s economy.
Last year, GDP or gross domestic product growth jumped 7.8% compared to the national average of 6.1%, topping more than US$240 billion. But the numbers only reveal part of the story behind a sprawling metropolis of more than 10 million people, nearly two million more than New York or London.
At the last count, about 300 of the world’s top 500 companies operated in the city, the epicenter of the coronavirus outbreak, which has so far claimed at least 107 lives and infected nearly 5,000 people across China.
In a matter of days last week, the capital of Hubei province was in lockdown, under siege from a silent predator, lurking in a seafood market.
The source is still unknown but it effectively ravaged a city that mirrors Motown with sprinklings of Silicon Valley. A magnet for stellar companies such as Renault, General Motors and Honda, as well as Microsoft and SAP, the German software company.
Financially, the hit could be massive.
“The economic impact for China – and potentially elsewhere – will be significant if the virus continues to spread,” The Economist Intelligence Unit stated in a report.
Before the outbreak, the EIU’s projected rate was 5.9%. But it warned that overall growth in the country could be trimmed by up to 1% to 4.9% if the epidemic reaches the level of SARS.
The Wuhan virus has been compared to Severe Acute Respiratory Syndrome, or SARS, which killed nearly 650 people across mainland China and Hong Kong between 2002 and 2003 with its flu-like symptoms.
Concerns are now growing that this new epidemic could turn into a similar nightmare scenario with the World Health Organization closely monitoring the situation after President Xi Jinping’s government sealed off 13 cities. Up to 56 million people, which is nearly the population of South Africa, have been put into de facto quarantine after a travel ban was imposed at the weekend.
An “emergency” has also been declared “in China” by the WHO, which stopped short of issuing a global edict.
“There’s still a lot we don’t know,” Tedros Ghebreyesus, the director-general of the WHO, told a media briefing in Geneva. “At this time, there is no evidence of human-to-human transmission outside China, but that doesn’t mean it wouldn’t happen.”
In Wuhan, commerce ground to a halt even before the start of the Lunar New Year holiday. Most of the major auto players were winding down production until the first week of February with millions of cars and trucks rolling off the assembly lines each year.
But the factory gates look certain to be shut for even longer as the disease intensifies and spreads.
“The ‘Wuhan coronavirus’ outbreak could potentially be high impact, similar to the 2003 SARS episode [in 2002 to 2003]. It poses a notable downside risk to our China growth forecast in Q1 and possibly Q2, depending on its duration and severity,” Tommy Wu, a senior economist at Oxford Economics, said.
“We think that consumption and travel will be the most affected, and to a lesser degree investment and industrial production. We also expect the Chinese government to roll out measures to stabilize growth,” he added.
Tianlei Huang, a research analyst at the Peterson Institute for International Economics, pointed out that sectors such as “transportation, hospitality, retail and entertainment are likely to suffer the most.”
“Though the economic impact of the novel coronavirus will depend on how well the health crisis is contained, and particularly how the Chinese government handles it, the toll could exacerbate China’s economic slowdown, which was previously forecast by PIIE to deliver 5.9% growth this year,” he wrote in a commentary on the Washington-based think tank’s website.
Yet less than a month ago, Wuhan was still a favorite destination for domestic and foreign investors, attracting tens of billions of dollars to its three national development zones, four scientific and technological parks, and the 1,600 high-tech enterprises and incubators.
Emerging sectors, such as renewable energy, have also sprouted up, backed by more than 300 research institutes.
Internet of Things
In December, tech group Xiaomi opened its new headquarters there with the focus on AI, or artificial intelligence, the Internet of Things and big data. The smartphone manufacturer moved to what is known locally as Optics Valley in one of the development clusters.
“My expectations for the next decade are to turn Wuhan into a large R&D center for Xiaomi and an AI-era technological highland,” Lei Jun, the company’s founder, told a media briefing last month.
But then, creativity has always coursed through the blood of a city with a history that stretches back 3,500 years and is known as “the cradle of urban civilization on the Yangtze River.” In 2016, the creative industries created $13.07 billion or 7.4% of Wuhan’s GDP.
Spliced with research and development in pioneering technologies, high-tech industries generated more than 1 trillion yuan or $143 billion in 2018.
“Optics Valley is now among the most innovative and fastest-growing regions in central China,” Wang Xiangwang, a member of Wuhan’s municipal committee of the Communist Party of China, said just weeks ago.
Until, of course, the deadly novel coronavirus, or 2019-nCoV, started infecting the very soul of the city … its people.