The Effects on China of the Earthquake and Tsunami in Japan
May 3, 2011
At 1:46pm on March 11th, Beijing time, there was a class 9 earthquake that hit near Honshu island of Japan. The earthquake as well as tsunami and the fire at a nuclear power station that followed not only brought fatal effects to Japan, but also greatly affected China as its close neighbor. However, the effects here have mainly been focused on the economy and day-to-day life:
The Effects on the Chinese Economy
According to “经济之声报” or “The Sound of Economics Report,” how the earthquake has affected the economy of China is the focus of economists from all political inclinations. In a recent forum titled “China and The World Economy” hosted by Tsinghua University, in Beijing on March 20th, some experts estimated that the Japanese earthquake may cause the GDP of China to decrease by as much as 0.5% and capital markets would experience a certain degree of turmoil for a period. The effects to China would be greater if Japan recovered slowly after the earthquake; the assumed point of risk being over 1 month.
Digital and Electronic Products Field
With Japan’s position in the digital storage device and high-end camera market, there has been an obvious price increase in these areas. For example, Kingston SD cards with the capacity of 4G and 8G have risen by RMB 10 and RMB 20, reaching RMB 55 and RMB 95 respectively. In addition, for USB flash disks, 4G and 8G have risen to RMB 53 and RMB 90, increases of over 20%. Similarly, the price for Japanese branded cameras have also experienced a rise. Take the Canon 550D for example. In Zhongguancun, a district in Beijing known for its electronics suppliers, the price was RMB 4980 before the earthquake, now it has risen to between RMB 5120 and RMB 5200.
Motor Vehicle Industry
The joint venture motor vehicle enterprises between China and Japan have suffered different kinds of effects since the earthquake. Because the stock of installation kits is limited and can only meet short-term supply demands, many enterprises have found it hard to maintain their production lines, including major players such as Honda, Toyota and Nissan.
Chinese IT enterprises are suffering the effects brought to the industry by the earthquake. The CEO of Lenovo Group, which is the #4 PC manufacturer worldwide, said this earthquake will have effects on the products distribution and the Japanese PC markets. At the same time, the earthquake will affect the material and battery supply of Lenovo. And of course, the sales of Lenovo in the Japanese market will suffer, but the degree to which this will be is still to be determined.
In actuality, the IT supply chain crisis triggered by the earthquake has only been slowly showing signs. Japan is a main supplier of global batteries and chip technology, and this earthquake has caused many factories to close down. The earthquake also brought a great deal of damage to the transportation infrastructure, industry based infrastructure, and the power supply from water, power and gas. This will mean long term effects on the chip industry as well electronic components and liquid crystal display panel, and these should not be ignored.
The Effects on Chinese Life
Since the earthquake, tourism to Japan has almost completely stopped. All group tours scheduled in March and April are applying for a return of deposits or requests for postponement, bringing large losses to some travel agencies.
Interestingly, even the cosmetics industry has been hit by the tragedy in Japan. Some consumers buying Japanese cosmetics from online Chinese retailer, Taobao, have noticed heavy increases in prices, forcing some to consider changing brands, in an industry that relies heavily on brand loyalty.
Baby Formula and Powdered Milk
After experiencing a “melamine” crisis, the imported powered milk has been the preferred choice of many young parents. Because of its reliable quality and nice taste, many parents choose Japanese powered milk. However, after the earthquake, not only is it harder to buy, but many are discovering that the product they went through so much efforts to buy are actually fake, causing many to change brands.
The suppliers for many Japanese restaurants have also experienced drastic changes to their operations. Even the dishes still available have had major raises in the price. The reasons are that the raw materials and condiments are all imported from Japan, from which the supply has obviously been affected
Chinese Salt Rush
Everyone in China is well aware of the short lived “Chinese Salt Rush” in the supermarket that occurred in the end of March. Rumor of nuclear leaks after the earthquake into the water supply, caused panic among Chinese people that the salt was polluted, resulting in much of the population to stock up on salt. This panic was largely sparked by a small number of Weibo posts, China’s major micro-blogging service. This momentary crisis has made it clear that the situation in Japan has made much of the Chinese population extremely wary.
More and more, the world has been described as a “global village.” Although the earthquake is technically only a regional disaster, the Japanese economy has been linked with the world, including China, particularly as a major regional trading partner. With recent the improvements to lives of the Chinese people, there is a feeling that their daily life is more and more related to the world. After the earthquake, the Japanese economy will suffer a major blow in the midst of a global recovery and a lingering economic stagnation for Japan. To ensure the well-being of our common global village, China should take an active part in the earthquake reconstruction efforts of Japan, for both the betterment of nation of Japan as well as for the