We use cookies to offer a better browsing experience, analyze site traffic, personalize content, and serve targeted advertisements. By clicking accept, you consent to our privacy policy & use of cookies. (Privacy Policy)

Can China’s Economy Survive The Coronavirus?

Coronavirus Is Spreading at a Staggering Pace

Headlines have been filled with news of the novel coronavirus. The disease which began in Wuhan, China, has now claimed 80 lives. As of this writing, the number of confirmed cases according to WHO, CDC, NHC, and Dingxiangyuan, is at 2,784. It has also spread to 14 countries outside of China, namely: Hong Kong, Thailand, Macau, US, Australia, Japan, Malaysia, Taiwan, France, South Korea, Vietnam, Canada, and Nepal.

The virus has been spreading at a staggering pace of 38.3% per day since January 20, and if the momentum continues, 64,588,740 people will be infected by the coronavirus in 31 days. The next few weeks, will therefore be very important for China and world governments. Will they be able to slow the growth?

Read our Best Trading Ideas for 2020.

[vc_single_image image=”29703″ img_size=”full” onclick=”custom_link” title=”Confirmed Cases of the Novel Coronavirus, Source: Center for Systems Science and Engineering at Johns Hopkins University” link=”https://gisanddata.maps.arcgis.com/apps/opsdashboard/index.html#/bda7594740fd40299423467b48e9ecf6″]

How is the Chinese Government Coping?

As a result, the Chinese government has adopted bold measures in an effort to contain the virus. For one, there has been a travel ban on Wuhan and 15 surrounding cities which affects around 35 million people. During the Lunar New Year over the weekend, mass celebrations were cancelled to prevent the disease from spreading.

The costs of the coronavirus spans more than human life. It is expected that the Chinese economy will take a hit as the disease takes its toll on different components of economic growth. Travel and transportation sectors are already seeing a slowdown in business activity in what is supposed to be the busiest time of the year for China.

Chinese Economy To Take A Hit from the Coronavirus

According to the transportation ministry, railway transport was 42% lower this year compared to the first day of the Chinese New Year in 2019. Flights are reportedly down by 42% and overall transportation in China is slower by 29%. Global tour operators are also forced to issue refunds to thousands of Chinese who planned their travel around the Lunar New Year.

The Chinese government has extended the holiday until February 2 to make up for cancelled celebrations. Consequently, manufacturing companies will not see their workers come back until next week.

Much of the coronavirus has been compared to the SARS outbreak in 2003. The latter claimed 800 lives. If this novel coronavirus is like its predecessor, we can take comfort in the fact that the world became SARS-free soon after its outbreak. The coronavirus could will soon come to pass too.

However, there is a striking difference to the Chinese economy then and now. In the first quarter of 2003, China was clocking in double-digit growth figures, expanding by 11.1%. SARS consequently pushed growth to 9.1% in the second quarter. However, the latest figures showed that economic growth in China for 2019 was only at 6.1%. Analysts are already expecting growth to slow down in the first quarter of 2020. But by how much, only depends on how soon the coronavirus is contained.

Don’t miss a beat! Follow us on Telegram and Twitter.

More content