In just one month, coronavirus has caused an global isolattion and taken a heavy blow to China – one of the leading economies in the world, and also one of the countries that destroy the environment and contribute to the terrible climate change.
Investors lost $ 393 billion from China’s stock market on Feb 3, sold off the yuan and dumped stocks amid the fear of corona virus spread and its negative impacts on the economy which have has led to the heavy consequences on the first day of trading in China since the Chinese New Year.
According to international media, the Shanghai composite index dropped nearly 8%, the biggest intraday decline in more than four years. The Chinese yuan has surpassed the $7 benchmark and trading shares in Shanghai have dropped to their floor prices.
This situation happened despite the Central Bank just made the largest injection of money since 2004 into the financial system of China, and there are clear corrective actions to curb the sell-off.
The total number of deaths in China from corona virus was 365 on Feb 3, compared with just 17 on Jan 3, the last trading session of the Chinese market before Tet.
The new virus causes alarm because it spreads quickly, people don’t know it well, and the government’s drastic reaction has the potential to have a negative impact on economic growth.
10,000 flights worldwide to China were completely canceled and suspended. Foxconn, Toyota, Starbucks, McDonald’s and Volkswagen are some of the big corporations that have suspended and closed operations throughout China.
On Feb 3’s afternoon, the Shanghai Composite Index, Shenzhen Composite all fell more than 8%, the lowest level in four years although the People’s Bank of China (PBOC) injected 1.2 trillion yuan ($173.81 billion) into cryptocurrency markets through reverse bond acquisition deals, the biggest move since 2004.
The Chinese securities regulator also acted to curb sell-offs and called on mutual fund managers not to sell their shares unless they had to repay investors, sources told Reuters.
Cities like Wuhan, where the corona virus originated, remain frozen and China faces international isolation.
Analysts began to see that the impact of the epidemic would be greater than that of Acute Respiratory Syndrome (SARS) in 2002-2003.
Coronavirus and the comeback of H5N1 viruse adversely affect China’s economy
On Feb 1, Chinese authorities announced that the bird flu came back in China’s central region. There are new economic fears amid outbreak of the new strains of corona virus.
News from China indicates that H5N1 bird flu started in Hunan province, which is close to the pandemic outbreak caused by the new strain of corona virus.
China’s Ministry of Agriculture and Rural Development announced that H5N1 bird flu had killed 4,500 chickens from the disease, forcing local authorities to destroy 17,828 poultry.
According to the World Health Organization (WHO), avian influenza H5N1 has a low possibility of transmitting infection to humans but once infected, the mortality in humans is up to 60%.
China struggled with African swine cholera last year, causing the country to fall into a pork shortage with consumer prices rise to the highest level in 8 years.
Wuhan City- the epicenter of the coronavirus outbreal with empty roads
China’s tourism industry was affected during an extraordinarily quiet spring festival holiday, while movie theaters were forced to close to try to stop the virus spreading.
Meanwhile, many factories have suspended production while companies have instructed employees to work from home.
Foxconn, Toyota, Starbucks, McDonald and Volkswagen are giant companies that have suspended operations or closed stores across China.
Analysts at Oxford econom said they expected the coronavirus’s economic impact to be “high, but short-lived, as seen in the 2003 SARS episode“.
However, the scale of the outbreak and the implications are worse than in those the case of SARS, because coronavirus is attacking a large part of China and its population.
“Moreover, we cannot rule out an even more serious and lasting impact due to differences in virus behavior, greater influence from government travel restrictions and company shutdowns, and more connected economy during this period.”
“Although most analysts agree it is too early to estimate the effects of the corona virus on the global economy, one thing I am increasingly certain is that the short-term shock to the Chinese economy will be higher than the SARS period” said Tommy Xie, head of China research at OCBC China Central Bank.
“The shock to Chinese manufacturing and industry will be unprecedented.”
“Many investors have never experienced such a crisis. It is impossible to blame people when they withdraw money from the market,” said international media Fang Fang, director of Shanghai WuSheng Investment Management Partnership.
Economic channels in the US quoted economic experts as saying that China’s growth rate could drop by two percentage points this quarter due to the outbreak of the epidemic.
That, according to international media, is equivalent to a 62 billion dollar decline.
Besides, so far, Chinese central and local governments have spent $12.6 billion on medical equipment and treatment.
The Global Times reported that the government’s efforts to stop the virus by prolonging the Chinese New Year holiday and forcing factories to shut down production and disrupted global supply chains.
The most optimistic scenario, according to international media, was launched this week by Zhang Ming, a Chinese economist at the Chinese Academy of Social Sciences, predicting that the epidemic will last until the end of March, and China’s economic growth will drop to 5% in the first quarter.
He added that viruses can also make consumer goods more expensive. While the budget has been tightened by increasing public debt; and the pork crisis caused by African swine cholera outbreak last year caused meat prices to skyrocket. And now, vegetable prices are rising again as people rush to buy necessities during the corona virus outbreak.
Tourism – a multi-billion dollar industry during the Chinese New Year – has been hit hard by the government’s decision to quarantine many major cities and tourists avoid traveling for fear of infection.
Major travel agencies, hotels, and airlines have offered refunds to guests who arrive near the end of February. Many airlines have stopped flights to and from China.
“It is still not clear when the factory workers, or how many, will return to work. We have not had reports of corporate profits since the corona virus spread. Restaurants and retail stores have very low sales ”.
China was forced to mobilize military forces to control the corona flu
This year – as one analyst told me – “economists are blind” because the data out of the country is the most scant, patchy and unreliable.
We are now in the dark about the health of the Chinese economy – which is worrying because it is related to the global economy.
The prices of commodities traded on the Shanghai floor such as oil, iron ore, copper … all fell sharply, linking the overall decline in the world. Copper prices fell to 7%, hit the lowest level in more than 3 years. Prices of aluminum, tin and lead fell by more than 4%, soybean prices by 2%.
In addition, according to Chinese state-run television (CCTV), Beijing said it would help key commodity-producing companies resume operations as soon as possible.
“Although most analysts agree that it is too early to estimate the impact of the Corona epidemic on the global economy, I am sure this is a short-term shock and much higher than that caused by SARS outbreaks on the Chinese economy, “Tommy Xie, head of the Mainland Research Group at OCBC Financial Services, told the international media.
Vietnam and China are two countries sharing the same borders and ideologies of communism. The first Vietnamese people infected with the corona virus are from Chinese tourists.
The Vietnamese government must wait until the outbreak of the disease, which has killed hundreds of people in China and spread the disease in Vietnam, will start to take limited measures, but it is too late.
And now the people of Vietnam are starting to pay for the weakness of the Hanoi government, possibly with the lives of themselves and their families.
Ha Yen from Ha Noi – Thoibao.de (Translated)
