Though it seems more than a little callous to worry about how the earthquake in China’s Sichuan province will affect our marketplace, in an industry that heavily depends on Chinese manufacturing, it would be sheer folly not to.
However, various reporting outlets are stating that the disaster’s effect on the Chinese economy will be minimal, which hopefully by extension, means U.S. manufacturing will receive nary a jolt. Here are a few soundbites from various news sources that you might be interested in:
BusinessWeek: ”China Quake Won’t Shake Economy”
However, many economists expect the impact on the Chinese economy of the power outages, communications breakdowns, and blocked roads to be limited. “In the short term, there will be a temporary disruption in industrial production, but it should recover very quickly,” says Lehman Brothers (LEH) Hong Kong-based economist Mingchun Sun. One reason, he says, is that the quake hit a rural area without a big manufacturing base.
The Wall Street Journal: ”The Earthquake and China’s Economy”
Sichuan province is not a manufacturing center. The province makes up 3.9% of China’s GDP and manufacturing output in Sichuan is only about 2.5% of the national total.
Forbes.com: ”Earthquake Reaction and Overreaction”
In America, will we be able to detect higher prices of Chinese-sourced products in local big-box retailers because of earthquake damage? The answer is a resounding no.
Many businesses located in Chengdu, both Western and Chinese, were hit, some considerably. They will get back to business as quickly as they can. About 60 firms located in Sichuan province had their shares suspended from trading on the Chinese stock market. But the other 1,450 Chinese stocks have continued to trade.