Coronavirus chaos lays bare the price of uncertainty in a connected global economy

Fukushima, Sars and now the novel coronavirus are showing up the increasing vulnerability of global supply chains to uncertainty and disruption. We need to study, map and measure these risks before global cooperation crumbles

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Empty shelves in a Hong Kong supermarket on February 5. International production of countless goods and services have slowed down or even stopped in the wake of the coronavirus. Photo: Bloomberg

Published: 1:00am, 17 Feb 2020Updated: 1:00am, 17 Feb 2020

The novel coronavirus is spreading silently and invisibly through its human carriers, inflicting fear and sickness. Likewise, malaise can spread through the “carriers” of the global economy: the supply chains that link myriad manufacturing and service-sector firms around the world.

These supply chains are the circulatory or nervous systems of the global economy and, like their equivalents in the human body, receive little or no attention until things go wrong. Once they do – which is increasingly often – our extreme vulnerability to these hidden links is exposed.

International production of countless goods and services – from cars to smart phones, from processed foods and drinks to essential medication, and from financial to technological services – can slow down or even stop, adding to the fear and damage occasioned by the underlying malaise.

Asia – China especially, but also South Korea and many Southeast Asian countries – became the epicentre of supply chains as it emerged to become the world’s workshop or assembly shop. Countries such as India and Bangladesh were relatively late entrants, but are key parts nevertheless.

The first generation of supply chains, according to Changyong Rhee, director of the Asia and Pacific department at International Monetary Fund, involved some of the world’s biggest manufacturers, such as Apple, which assembled smart phones in China from inputs across and beyond Asia. Car makers from the United States, Japan, South Korea and Europe did likewise.

The huge and complex web of supply or value chains has since expanded as the world’s makers of garments, electronics and cars have diversified assembly beyond China into countries such as Vietnam and Bangladesh, while Chinese manufacturers did likewise. The web is a largely unmapped maze.

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