The Coronavirus Will Not Cripple China’s Economy
Although the scope of the coronavirus outbreak exceeds that of SARS in 2003, current data suggest that the epidemic will likely reach a turning point in the next two weeks. That would mean China might conquer the virus in the first quarter, which is essential to mitigating the epidemic’s impact on overall growth in 2020.
SHANGHAI – Just five days before the Chinese New Year, the authorities in Beijing finally declared the coronavirus epidemic that originated in Wuhan to be a major public health emergency. Because Wuhan’s municipal government had initially withheld information and failed to control the virus effectively, about five million residents and temporary workers left the city for the Lunar New Year holidays before the city was officially closed off on January 23. As a result, the virus spread rapidly throughout China and beyond, leading to the current high-profile international health emergency.
Unsurprisingly, China’s economy is slowing down. The services sector, which includes retail, tourism, hotels, and transportation, and accounts for more than half of the country’s GDP, is suffering severely. Disruption in this sector will in turn affect manufacturing. And growing international concern at the continued spread of the virus might further strain trade and limit the movement of people. But the key question is whether we believe it will last longer.
My answer is no. The coronavirus epidemic is very unlikely to last long. Despite all its problems, China undoubtedly still has an unparalleled ability to mobilize resources in response to a large-scale emergency. During the last two weeks, for example, official efforts aimed at controlling panic have been first-rate. In addition to ordering a nationwide mobilization of medical personnel and resources (including from the military), the authorities have been assessing major hospitals’ capabilities to diagnose and treat coronavirus patients. More important, as part of a national disease-control campaign announced on January 20, officials are identifying and observing any citizens who had traveled to and from Wuhan since the outbreak began.