China”s worries about its economy are increasing by the day as the novel coronavirus epidemic has been spreading rapidly. Since the outbreak of 2019-nCoV that has so far killed around 425 people and infected over 20,000 people, Hubei province”s Wuhan city has been placed under a lockdown and 30 other provinces required to follow restrictions.
While the multinational giants like Apple, Starbucks and Ikea have shut down their stores temporarily, many countries are in the process of suspending air travel to and from China. India suspended air travel from China and declared all its visas for the Chinese and foreign nationals living in China ”invalid”. The Oxford Economics in the meantime has estimated that China”s economic growth will slip down to 5.4 per cent from 6.1 per cent due to the epidemic.
Sources said that the authorities in Beijing are worried that if the country is declared as an “epidemic area”, it will harm China”s three main sectors — trade, manufacturing and service. Blocking of air, sea and land routes by major trade partners, will have a negative impact on China”s trade amidst an already prevailing slowdown, the authorities fear. Indefinite halt in manufacturing operations especially electronics and automobiles, in Wuhan, a major business center, may disrupt the global industrial chains, sources said. The government also apprehends that consumer industries such as tourism, catering, entertainment and logistics, in particular for small and medium sized enterprises, will face enormous stress.
Profits of China”s major industrial firms have already dropped 3.3 percent in 2019 from the previous year, Beijing revealed on Monday. Sources said China”s central bank, the People”s Bank of China, is likely to gradually reduce its loan prime rate (LTR) and banks” reserve requirement ratios (RRRs), beginning this month. The Central bank has already put trillions of Yuan into the financial market in the last few days in order to restore investor confidence which has been eroding due to rapid spread of the epidemic.
