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Impact of Coronavirus on Chinese Economy

Impact of Coronavirus on Chinese Economy

Healthcare | Feb, 2020

The coronavirus (2019-nCoV) outbreak has hit the Chinese economy hard. As soon as the Chinese markets opened on 3 February, Monday, 2019, within minutes, trading was discontinued on multiple stocks as they hit the regular 10% limit that Chinese law allows. The next few months are anticipated to prove painful to an economy that is still reeling under its most stagnant growth period in last three decades. This coupled with a continuance of trade war between China and the United States poses a huge challenge to the country’s economy. Over 51,857 Coronavirus cases have been confirmed as of 16th February 2020, worldwide.

Impact of the virus in China is being felt everywhere, from obstructed air travel to uneven supply chains and plunging commodity prices, all of which is dampening growth prospects from Southeast Asia to South America and beyond. Many pre-eminent chains, from Apple to the hotpot giant Haidilao, have shut their doors until further notice. Even in municipalities that are usually back at work, such as Beijing, the streets and subways continue to be abandoned.

Economists and analysts still warn that the full economic fallout depends on how well China can eventually contain the outbreak. Within China, the breakout and the government’s response —typically, firewalling off nearly 100 million people in central Hubei region, where the virus was born—already have affected number of sectors, from hospitality and retail to airlines, insurance, and construction. Numerous cities and towns have incorporated their quarantine measures. Among the most restrictive are those in Wenzhou, the city badly hit by the virus outside Hubei and a vital cog in China’s maritime trade.

Likely Reason - China’s Meat Industry

China is a meat-loving country, but one look at their meat markets can make the bile churn in your stomach. The situations where humans and animals are working and residing in the markets are in despicable condition. There is no medical officer insight who is out there to verify if the animals being brought in are sick or diseased. WHO has frequently asked countries to ensure hygiene and better farm practices in the meat business, if people don’t want to have disease-ridden meat appearing to their table or viruses attacking species and mutating dangerously to poison and killing humans.

This harsh truth has reared its head again as the international scientific population now investigates the source of the mutating Coronavirus and governments struggle to keep their people safe from it. Early reports from China’s Wuhan, the toxic ground zero from where the Coronavirus has grown, points to the sea-food market as a possible origin. Few of the recent scientific reports point to the usual suspects - snakes, bats and the exotic live wild animals. In fact, with the threat that Coronavirus spread poses, the Chinese health officials have forbidden the trade of wild animals, at least for the time being.

Earlier Cases / Lessons We Have Learnt So Far

Regrettably, this is not the first time that meat and farm practices are causing a health peril. In the UK (in 1980s), the “mad cow” disease originated from a cannibalistic non-vegetarian feed of crushed meat and osseins that was given to cows, who are herbivores. This illness that influenced the nervous system of cows triggered health attention in humans as well in the early 2000s.

In 2003, China was at the heart of SARS (Severe Acute Respiratory Syndrome) that spread from the country’s Guangdong province, where the beginning of the virus was linked to civets. This was followed by bird flu outbreak in 2005. In 2009, rising number of swine flu cases increased concerns on the conditions in pig-farms in Mexico. Ebola was traced to uncooked bushmeat or wild meat in Africa, while Nipah virus crossed species possibly due to consumption of half-eaten fruits that had been bitten by a bat, as concluded by virologists.

What is the 2019-nCoV

Until the 21st century, the most dangerous coronavirus, a large family of viruses competent of infecting humans and animals, could do to humans was to give a common cold - annoying but hardly sinister. But thrice so far in the 21st century, novel coronaviruses have caused a deadly pandemic —SARS (Severe Acute Respiratory Syndrome) in 2003, MERS (Middle East Respiratory Syndrome) in 2012, and now 2019-nCoV emanating from Wuhan, China.

Most frequently, spread from person-to-person happens among close associations (about 6 feet). Person-to-person spread is thought to transpire mainly via respiratory droplets produced when an infected person coughs or sneezes, similar to how influenza and other respiratory pathogens spread. These drops can come in contact with the mouths or noses of humans who are nearby or possibly be inhaled into the lungs. It’s presently unclear if a person can get 2019-nCoV by touching an exterior or object that has the virus present on it and then touching their nose, mouth, or possibly their eyes.

Usually, with most respiratory viruses, people are considered to be most contagious when they are most indicative (the sickest). With 2019-nCoV, however, there have been reports of disease spread from an infected patient with no visible symptoms.

It’s important to note that how quickly a virus spreads, person-to-person can vary. Some diseases are highly contagious (like measles), while others may not be as severe. There is much more to gather about the transmissibility, austerity and other features associated with 2019-nCoV, and studies are ongoing.

The symptoms for 2019-nCoV involve fever, cough and shortness of breath. Symptoms of 2019-nCoV may develop within two days or may take as long as 14 days.


There is presently no vaccine to prevent 2019-nCoV infection. The best way to avoid disease is to evade being exposed to this virus. Common preventive actions to help limit the spread of respiratory viruses as recommended by Centers for Disease Control and Prevention, US (CDC) are as under:

  • Wash the hands frequently with soap and water for at least 20 seconds, particularly after visiting bathroom; before eating; and after blowing your nose, convulsing or sneezing.
  • If soap and water are not easily available, use an alcohol-based hand sanitizer with at most limited 60% alcohol.
  • Avoid rubbing your eyes, mouth and nose with unwashed hands.
  • Avoid close association with people who are sick.
  • Stay indoors when you are sick.
  • Mask your cough or sneeze with a tissue, then throw the tissue in the garbage.
  • Clean and sanitize frequently touched objects and surfaces using a regular house cleaning spray or wipe.
  • Use a facemask when you are around other people (e.g., sharing a place or vehicle) and before you access a healthcare provider’s office.
  • Elude sharing personal household items like drinking glasses, dishes, cups, dining utensils, towels, or bedding with other people. After utilizing these items, they should be washed completely with soap and water.
  • Seek immediate medical attention if your illness is worsening (e.g., shortness of breath or trouble breathing). Before endeavouring care, request your healthcare provider and tell them that you have, or are being assessed for, 2019-nCoV infection.
  • Current knowledge on 2019-nCoV is limited; thus, home precautions are conventional and based on general advice for other coronaviruses, similar to the Middle Eastern Respiratory Syndrome (MERS).


How Bad the Impact is on Chinese Economy?

When trying to estimate just how painful the outbreak will be for the world’s second-largest economy, most analysts look back to the 2003 SARS outbreak, which knocked off an approximated 1% or more from China’s growth rate. But the accord now is that the coronavirus will have an even more substantial impact than SARS—for several reasons.

First, the Chinese economy is exceptionally significant than it was previously. China completed last year gasping, with official GDP growth rate at its lowest level since 1990 - about 6% - and with confidence knocked-off by a yearlong trade war with the United States that left loads of hefty tariffs on Chinese exports. China’s Purchasing Managers’ Index, a measure of industry activity, was already showing indications of manufacturing contraction before the outbreak of coronavirus. In other words, the coronavirus is hitting a weaker economy than was the case with SARS. One should be anticipating a rapid reduction in speed of growth in the first quarter of 2020, and creeping stabilization for the rest of the year.

The extended shutdown over the New Year holiday has now played havoc with office staffing, internal travel, and even services for many small businesses. The uncertainty throughout the outbreak and the quarantine standards are makes billing and paying off loans questionable for firms that exist out of cash flow. The government has published regulations saying that workers must be paid in this time of crisis or if they are incapable of returning to work because of quarantine limitations.

Business suspensions and closures are likely to be particularly devastating for many small- and medium-sized enterprises with consequences that could persist into the third quarter of 2020. The whole production cycle across most businesses in China will be delayed owing to the virus outbreak.

With numerous conglomerates shutting down their factories, it has added to the already de-growing economy. Countless other US businesses dependent on Chinese suppliers are witnessing production and sourcing difficulties of their own now.

With almost all the airlines canceling flights to China, and some not planning a restarting until April, the problems looming over China does not seem to end. On the other hand, the tourism industry has been hit in an unprecedented way, particularly after neighboring countries have established harsh travel prohibitions on Chinese visitors. Thailand, in particular, is in a soup as there is public demand to close its boundaries to Chinese guests and the brunt is being witnessed by the country’s tourism industry that is highly dependent on the Chinese middle class.