When news of the coronavirus outbreak in Wuhan, China, broke out in late December, concerns not only about global health but also about the global economy spread. China has become a crucial part of the global economy as the world’s largest manufacturer and trader, and accounts for about one-sixth of global economic output. However, with the outbreak of the coronavirus, thousands of stores have closed and many companies have either stopped or slowed production of goods in China. Airlines have canceled 25,000 flights to and within China due to ticket sales collapsing, and companies are limiting their employees’ travel to China. Car manufacturing factories are delaying production. MKM Partners predicts that Imax Corp. will lose roughly $200 million in global box office sales in the first quarter if the epidemic continues for more than a few weeks.
Almost twenty years ago, SARS had similar impacts on the global market (China had just joined the WTO), but the economy rebounded rather quickly. However, because international companies have increasingly begun to rely on China as both a major consumer and a major manufacturer, it is predicted that the worldwide impact of this strain of the coronavirus could be bigger than SARS. China’s economic growth is predicted to decrease to 5.6 percent this year from 6.1 percent in 2019, which would reduce economic growth to an annual rate of 2.3 percent. This would be the slowest rate of economic growth since the global financial crisis from 2007 to 2009.
As a response, China’s leaders have proposed plans for the People's Bank of China to introduce a net 150 billion yuan ($21.7 billion) to markets in addition to other measures in an attempt to prevent volatility in financial markets.
Sources:
https://www.bloomberg.com/news/articles/2020-01-27/tracking-the-virus-outbreak-s-impact-on-business-and-travel
https://www.nytimes.com/2020/02/03/business/economy/SARS-coronavirus-economic-impact-china.html
https://www.bloomberg.com/news/articles/2020-02-01/pboc-vows-to-maintain-ample-liquidity-amid-coronavirus-outbreak
Almost twenty years ago, SARS had similar impacts on the global market (China had just joined the WTO), but the economy rebounded rather quickly. However, because international companies have increasingly begun to rely on China as both a major consumer and a major manufacturer, it is predicted that the worldwide impact of this strain of the coronavirus could be bigger than SARS. China’s economic growth is predicted to decrease to 5.6 percent this year from 6.1 percent in 2019, which would reduce economic growth to an annual rate of 2.3 percent. This would be the slowest rate of economic growth since the global financial crisis from 2007 to 2009.
As a response, China’s leaders have proposed plans for the People's Bank of China to introduce a net 150 billion yuan ($21.7 billion) to markets in addition to other measures in an attempt to prevent volatility in financial markets.
Sources:
https://www.bloomberg.com/news/articles/2020-01-27/tracking-the-virus-outbreak-s-impact-on-business-and-travel
https://www.nytimes.com/2020/02/03/business/economy/SARS-coronavirus-economic-impact-china.html
https://www.bloomberg.com/news/articles/2020-02-01/pboc-vows-to-maintain-ample-liquidity-amid-coronavirus-outbreak
This article was really interesting and definitely relevant as the coronavirus continues to spread. I think it's important to note that the virus is continuing to spread and hasn't really shown signs of stopping yet. What has the chinese government planned on doing as it continues to spread? Will China be isolated from the global economy as a result?
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