Coronavirus affects both Chinese and international economy

LAHORE: Following the outbreak of the deadly and uncontrollable coronavirus in China during December 2019, the epidemic has begun taking a toll of the country's businesses, as according to the "New York Times", at least 150 million people in China - over 10 per cent of the country’s population - are facing government restrictions about how often they can leave their homes.

Remember, China’s central bank has already cut its medium-term lending facility rate by 0.1 percentage points to 3.15 per cent on Rmb200 billion (US$ 28.6billion) worth of loans offered a few days ago in a bid to inject liquidity into the country's interbank market and somehow neutralize the venom of the coronavirus.

According to the Qatar-based "Al-Jazeera Television", the virus may cost China one per cent of its annual GDP! From Starbucks and Disney to FedEx and Nike, Coronavirus has disrupted supply chains and closing off access to an otherwise lucrative consumer market.

Japan's video games and gaming devices manufacturer, Messrs Nintendo, Estée Lauder, Fiat Chrysler, Tesla, Ford Motor, Nissan, McDonald's, Canada Goose Holdings and South Korea's Hyundai are all affected by this virus, which is forcing them to restrict travel to China or temporarily shut stores, offices, restaurants and theme parks etc.

The "New York Times" has reported: "HSBC, one of Hong Kong's most important banks, plans to cut 35,000 jobs over the next three years as it struggles to revive a business that has come to depend increasingly on China for growth. The London-based bank said on Tuesday that it aimed to cut $4.5 billion in costs as it faces headwinds that include coronavirus outbreak in China and months of political strife in Hong Kong, one of its most important markets. The Coronavirus is causing economic disruptions in Hong Kong and mainland China that could have a negative impact on performance this year, the bank warned."

The South Korean fears: South Korea has warned of an economic 'emergency' from Coronavirus.

South Korean President, Moon Jae-in, warned on Tuesday that the outbreak of the Coronavirus in China, his country’s biggest trading partner, was creating an "emergency economic situation", and ordered his government to take actions to limit the fallout, according to the "New York Times".

According to the London-based "Financial Times", Singapore has cut its GDP growth forecast for 2020 citing fallout from the coronavirus as well as uncertainty over the US-China trade deal and geopolitical tensions in the Middle East potentially impacting commodity markets.

The newspaper has maintained: "South Korea plans to extend Won420bn ($356m) in emergency loans to support struggling airlines, shipping companies, travel agencies and retailers facing a liquidity crunch amid growing fears over the outbreak of the new coronavirus. South Korea's nine airlines have reduced the number of flights to China by about 70 per cent over the past month amid falling travel demand, especially to China. State-run Korea Development Bank will provide cash-strapped airlines with Won300bn in special loans, the transport ministry."

A fly back into some diseases that had hit China previously:

British News agency "Reuters" has stated: "During the global financial crisis of 2008 and 2009, about 20 million Chinese migrant workers lost their jobs as exports tumbled. That prompted a huge stimulus package by Beijing that quickly boosted growth but saddled the economy with debt. But in 2002 and 2003, the Chinese economy stayed on a solid footing despite SARS. Last week, the cabinet pledged to prevent large-scale layoffs, telling local governments to help stabilise jobs by drawing on unemployment insurance and similar funds."

The media house adds: "Firms in China's sprawling services sector, from restaurants and hotels to shops, cinemas and travel agents, have borne the brunt of the outbreak, besides small manufacturers that were just barely profitable, economists said."

The "Reuters" also quoted Dan Wang, an analyst with the "Economist Intelligence Unit", as saying: "Job losses could run as high as 4.5 million, he forecast. Private firms account for 80% of urban employment. Before the virus outbreak, unemployment had already risen, with the official survey-based jobless rate standing at 5.2% in December, up from 4.9% in April 2018 as a trade war with the United States pinched firms.