BEIJING (REUTERS) - China's economy is facing increasing negative impact from the virus outbreak, especially on consumption, a vice-chairman of the country's state planner said on Monday (Feb 3).
Mr Lian Weiliang of China's National Development and Reform Commission said during a press briefing that the impact from the outbreak will be for the short term and that China is fully capable of minimising the economic impact from the outbreak.
Investors erased US$420 billion (S$573 billion) from China’s benchmark stock index on Monday, sold the yuan and dumped commodities as fears about the spreading coronavirus and its economic impact drove selling on the first day of trade in China since the Chinese New Year.
The market slide came even as the central bank poured cash in to the financial system – a show of support for the economy - and despite apparent regulatory moves to curb selling.
The total number of deaths in China from the coronavirus rose to 361 as of Sunday. It had stood at 17 when Chinese markets last traded on Jan 23.
By lunchtime, the benchmark Shanghai Composite index sat 8 per cent lower, near an almost one-year trough and poised to post its worst day in more than four years.
The yuan opened at its weakest level in 2020 and slid almost 1.2 per cent, past the symbolic 7-per-dollar level, as the falls soured the mood in markets throughout Asia.
Shanghai-traded oil, iron ore, copper and soft commodities contracts all posted sharp drops, catching up with sliding global prices.
The new virus has created alarm because it is spreading quickly, much about it is unknown, and the authorities’ drastic response is likely to drag on economic growth.
“This will last for some time,” said Ms Iris Pang, Greater China economist at ING. “It’s uncertain whether factory workers, or how many of them, will return to their factories.
“We haven’t yet seen corporate earnings since the (spread of the) coronavirus. Restaurants and retailers may have very little sales.”