Prof Zhang Jun

Coronavirus: why China’s economy is likely to make a robust recovery

The epidemic may well reach a turning point in the next two weeks, confining the worst of the economic impact to the first quarter. This, and policy adjustments, should allow China to record economic growth of 5-5.5 per cent for the year, firmly back on track

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Empty streets in the central business area in downtown Beijing on February 10, the first working day after the extended Lunar New Year break. The epidemic is likely to cause only short-term economic pain. Photo: Simon Song

Prof Zhang Jun

Published: 1:00am, 13 Feb 2020Updated: 1:38am, 13 Feb 2020

Just five days before the Lunar New Year, the authorities in Beijing finally declared the novel coronavirus pneumonia that originated in Wuhan a major public health emergency.

Because Wuhan’s municipal government had initially withheld information and failed to effectively control the viral spread, about 5 million residents and temporary workers left the city for the Spring Festival holidays before the city was officially closed off on January 23. As a result, the virus has spread rapidly throughout China and beyond, leading to the current international health emergency.

Unsurprisingly, China’s economy is slowing. The services sector, which includes retail, tourism, hotels and transport, and accounts for more than half of the country’s gross domestic product, 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 mobilise resources in response to a large-scale emergency. During the past two weeks, for example, official efforts aimed at controlling panic have been first-rate.

In addition to ordering a nationwide mobilisation 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 travelled to and from Wuhan since the outbreak began.