Coronavirus Impact on Chinese Economy Recap

What started as an unusual respiratory illness in China at the end of 2019 has quickly become a full-blown global health crisis with thousands affected worldwide. At the end of December 2019, Chinese government officials announced that several dozen individuals were being treated for pneumonia-like symptoms in the Hubei Province port city of Wuhan. Several of the ailing individuals worked in the Huanan Seafood Wholesale Market, which is now thought to be the epicenter of the coronavirus known as COVID-19. 

In January, the first death from the virus was reported by Chinese State Media. As days passed, more cases of the illness were confirmed as it spread beyond China. Primarily showing up in those who had traveled to and from the city of Wuhan. However, it wasn’t until late January that health officials were finally able to confirm that the virus was spreading through human-to-human contact

Once this news hit, global fears of an epidemic rose rapidly, prompting Chinese officials to quarantine Wuhan and several other affected cities, cutting off transportation to and from the affected areas and implementing curfews. As the number of quarantined cities grew, Lunar New Year celebrations throughout China were canceled. 

By the end of January, the World Health Organization had declared the virus a “public health emergency of international concern,” prompting several major United States airlines to suspend all flights between the U.S. and China. The White House initiated restricted entry into the U.S. from 
Throughout February, the death toll in China rose beyond that of the SARS epidemic of 2002-2003. And to date, ___ infections have been reported and ___ deaths due to the virus. 

As a result of the quarantines and travel restrictions, disruptions to global supply chains increased. European and Asian auto manufacturing and electronic component plants’ production slowed to a near standstill. At the same time, China extended the Lunar New Year break for workers as a result of the outbreak. Though factories were set to reopen as of early February, many Chinese workers continued to be unable or unwilling to return to work. 
What long-term effects the epidemic will have on China’s economy in 2020 remain to be seen. China’s growing economy had already taken a hit during the Trump administration’s two-year trade war with tariffs imposed on approximately 70% of Chinese goods, causing many U.S. companies to reconsider international supply chains. 
As the struggle to contain the virus forced the Chinese economy to a near standstill, President Xi Jinping warned officials not to overreact amid rising concerns that containment efforts could cause extreme turmoil in China’s developing economy.

Several banks and researchers have now predicted a lower GDP growth forecast for 2020, with some even warning of a potential recession. The government has taken emergency measures to bolster the financial system, restore investor confidence, and in hopes of minimizing economic fallout. Aiming to reduce job loss, they’ve initiated tax relief and subsidies for affected industries. China’s central bank also announced measures to lower borrowing costs to ease the financial strain on those industries. Despite these efforts, experts still are unsure if it will be enough to prevent a recession. 

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