Garden-variety seasonal influenza is disproportionately dangerous to people with underlying illnesses or with relatively weak immune systems, many of whom are in their fifties and beyond. However, because avian flu can cause immune system hyperactivity, it is also especially lethal in those with the strongest immune systems. Thus, unlike seasonal influenza, avian flu could kill the most productive members of the workforce. This outcome would compound the already apparent impact of China’s 1979 one-child-per-family policy, which has reduced the size of the cohort entering the labor force. The workforce would shrink even faster, putting pressure on China’s inadequate social safety net and on the low real wages that sustain China’s workshop.
Fully 90% of China’s exports are manufactured; a quarter of these head to the U.S. market, accounting for a fifth of U.S. imports. Disease in the manufacturing workshop will depress China’s performance as the world’s third-largest exporter because of potential harm to its main customers (the United States, the European Union, and Japan) and to its East Asian suppliers, which provide almost half of China’s imports. The impact will be felt differently by different industries and types of businesses.
About 45% of China’s exports are telecom and office equipment, textiles, apparel, or auto parts; most of these items are produced by large foreign-invested enterprises in coastal areas. Such enterprises will fare reasonably well because governments and employers will act quickly to contain disease outbreaks and locate alternative labor. Instead, problems will arise among local parts suppliers and those who produce the other half of China’s manufactured exports. These producers are domestically owned small businesses, operating with thin margins and supplying the parts for the country’s export platforms and myriad consumer goods—leather, plastics, furniture, toys, sports equipment, food—that giant retailers like Wal-Mart then import. Logistical and employment problems, both from quarantines and from the spread of flu, would ripple through international markets to consumers and retailers in the form of higher prices and lower availability, sales, and employment.