Coronavirus: China's central bank says outbreak could disrupt economy in Q1

BEIJING (REUTERS) - China's economy could be disrupted in the first quarter due to the coronavirus outbreak, but it is expected to recover once the virus is brought under control, a vice-governor of the central bank said on Friday (Feb 7).

The People's Bank of China is closely watching the impact of the outbreak on the economy, and is preparing policy reserves to offset the pressure, Vice-Governor Pan Gongsheng told a news briefing on Friday.

Analysts believe China's first-quarter economic growth could slow sharply by 2 percentage points or more from 6 per cent in the last quarter, but could rebound sharply if the outbreak peaks soon, much like the pattern during the Sars (severe acute respiratory syndrome) epidemic in 2003.

Widespread travel and public health restrictions are taking a increasing toll on tourism, restaurants and other parts of the services sector, while many factories have suspended operations until next week or longer.

Mr Pan said the PBOC will maintain ample liquidity and deepen interest rate reforms.

It pumped large amounts of cash into the financial system on Monday to shore up confidence and cut some key money market interest rates.

China's Customs office also said on Friday that it would not issue preliminary trade data for January but would combine January and February data, in line with how some of the country's other major economic indicators are released early in the year. The Customs office issued the statement in the afternoon in response to a query about the January data, which had been expected to be released around 11 am on Friday.

Chinese data early in the year is often heavily distorted by the timing of the long Chinese New Year holidays, which fall in either January or February. But the coronavirus epidemic this year, which originated in Wuhan, has also resulted in widespread business disruptions that are spilling over into global trade.

The death toll from the epidemic in mainland China reached 636 as of the end of Thursday, up by 73 from the previous day. There were 3,143 new confirmed infections, bringing the total so far to 31,161.

China will also implement cuts in taxes and fees, Vice-Finance Minister Yu Weiping said at the briefing.

China Banking and Insurance Regulatory Commission Vice Chairman Zhou Liang said he expects banks' non-performing loan ratios to rise somewhat amid the outbreak but said China has ample resources to deal with any rise in bad loans.