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The ongoing coronavirus outbreak will have temporary, limited economic effects, but it won"t leave a permanent mark on the Chinese economy due to the country"s strong economic fundamentals, according to the nation"s top economic regulator.
"We are fully capable and confident of winning the battle against the epidemic caused by the novel coronavirus, and we have confidence in minimizing its impact on the economy," said Lian Weiliang, deputy head of the National Development and Reform Commission.
"In comparison with the 2002-2003 SARS epidemic, China"s economic strength, material and goods accumulation and ability to cope with emergencies are significantly stronger than that period," Lian said at a State Council Information Office news conference in Beijing on Monday.
The spread of the virus has sparked concerns among Chinese investors and sent China"s A-share market tumbling on Monday, the first trading day after the extended Lunar New Year holiday.
The key Shanghai Composite Index slumped by 7.72 percent, or 229.92 points, to close at 2,746.61, the largest single-day point loss since 2016.
Health authorities announced on Monday that 17,205 infection cases of the novel coronavirus had been confirmed on the Chinese mainland by the end of Sunday, with 361 deaths. This contrasted with 830 confirmed cases by Jan 23, the last trading day before the holiday.
Despite the market plunge on Monday, a net total of nearly 18.2 billion yuan ($2.6 billion) in foreign capital flowed into the A-share market via stock connects between the mainland and Hong Kong bourses, the second-highest amount in history, pointing to global investors" confidence in the long-term prospects of the Chinese economy.
Xu Gao, chief economist at BOC International (China), said economic fallout from the outbreak should be short-lived as stringent control measures may help curb the epidemic"s nationwide spread as early as this month.
"What concerns the market most is the uncertainty over future developments of the outbreak," Xu said. "Once there is a clear trend that the epidemic is being contained, the market should see a palpable recovery."
The epidemic may drag down year-on-year GDP growth for the first quarter by about 1 percentage point and cost full-year growth around 0.2 percentage point, contingent on effective policy measures to combat the epidemic, Xu added.
The People"s Bank of China, the nation"s central bank, injected 1.2 trillion yuan into the financial system on Monday and lowered interest rates for financial institutions to procure the funding by 0.1 percentage point. Analysts said the move signaled more monetary easing measures in the future to help the economy ride out the virus.
"To cope with the current situation, fiscal policies should focus on providing tax breaks and financial subsidies for sectors impacted by the coronavirus, and more efforts are needed to boost consumption and resume production," said Tang Jianwei, a senior economist at Bank of Communications in Shanghai.
"Economic growth in the first quarter is likely to get hurt since the outbreak coincides with the period surrounding the Spring Festival holiday," Tang said. "The coronavirus will hit tourism, lodging, catering, transportation and other related sectors hard. Sales of clothing, furniture, home appliances and cosmetics may also be affected to some extent. Despite the temporary impact on the Chinese economy, the outbreak won"t affect the economy"s mid-to-long-term fundamentals," Tang added.
Looking into 2020, major factors influencing the economy are domestic macroeconomic policies and the external environment of economic and trade relations with the United States, he said.
December"s weaker profitability data among industrial firms also added to analysts" confidence that more measures to stabilize the economy are on the horizon, as the data indicated that domestic demand remained sluggish.
Profits of China"s major industrial firms declined 6.3 percent year-on-year in December, down from a 5.4 percent year-on-year expansion in November, the National Bureau of Statistics said on Monday.
Wang Haoyu, managing director at Beijing-based CreditEase Wealth Management, said that the stock market slump caused by the epidemic is creating buying opportunities as the long-run bullish prospect remains intact.
The virus outbreak will not change the long-term factors that determine the attractiveness of the A-share market, such as low valuations by global standards, the increasing allocation of foreign capital and the ramped-up efforts of market-oriented and law-based reforms, Wang said.custom wristbands los angelesmy chemical romance rubber braceletmorse code bracelet customcolour changing wristbandscheap custom wristbands free shipping