Staff members work at the assemble plant of FAW-Volkswagen Automobile in Chengdu, southwest China's Sichuan Province, Feb. 19, 2020. FAW-Volkswagen Automobile Co., Ltd. resumed production at its four production bases across China amid the novel coronavirus (COVID-19) outbreak. (Xinhua/Liu Kun)
The Chinese economy is resilient enough to counter the novel coronavirus shock and the epidemic will not alter growth momentum in the world's second largest economy, economists and market strategists have said.
"Whatever the impact on China's GDP (gross domestic product) growth this year might be, this disease will not affect China's medium- or long-term growth prospects," Albert Keidel, a senior fellow at the Atlantic Council, a U.S. think tank, told Xinhua via email on Thursday.
China still has major market reform initiatives it needs to implement, especially in terms of labor force transformation and accelerated infrastructure creation related to urbanization, which continue to drive economic growth, said Keidel, who is also a former senior economist at the World Bank's Beijing office.
Stephen Roach, a senior fellow at Yale University's Jackson Institute of Global Affairs, said in a recent email interview with Xinhua that while the epidemic may weaken near-term economic performance, "I remain optimistic on China for the long run."
Workers examine inductors produced at a poverty alleviation workshop in Taoyuan County, central China's Hunan Province, Feb. 20, 2020. After taking sufficient measures of preventing the novel coronavirus, many production lines of the workshop have resumed production. (Photo by Chen Sihan/Xinhua)
The negative implications of the virus on the Chinese economy will be short-lived, and the internal driving forces combined with appropriate policy stimulus will help cushion the blow, according to experts.
"The impact of any such virus-related disruption is likely to be temporary, followed by a sharp rebound," said Roach, adding policy tools coupled with continued reform efforts would facilitate a vigorous post-virus rebound and underpin the underlying strength of the Chinese economy.
Roach, who is the former chairman of Morgan Stanley Asia, said that by continuing to emphasize the key structural transitions, including shifting the growth dynamic from exports and investment to internal private consumption, from manufacturing to services, from surplus saving to saving absorption in order to better fund the social safety net and spur discretionary consumer demand, and from imported to indigenous innovation, while at the same time remaining committed to the all-important deleveraging campaign, "the long-term prospects for the Chinese economy remain outstanding."
Many analysts voiced their confidence in the prospects of the Chinese economy despite the potential short-term economic slowdowns amid the epidemic outbreak.
"The Chinese economy is extremely resilient, so we don't see this as having lasting damage," Luis Oganes, head of currencies, commodities, and emerging markets at JP Morgan, told Xinhua on Wednesday.
When the coronavirus episode ends, "a full resumption of economic activities" is likely, said the veteran analyst, adding such kind of "massive catch-up economic activity" will compensate for short-term decline.
"So I don't think that this is going to dent the potential growth of the economy," he noted.
A staff member disinfects a workshop at Haoshou Garments Co., Ltd. in Jinjiang City of southeast China's Fujian Province, Feb. 20, 2020. (Xinhua/Jiang Kehong)
Businesses outside China's central Hubei Province have gradually resumed operation in an orderly manner recently as the fight against the novel coronavirus continues.
Meanwhile, China has rolled out a raft of measures to strengthen its financial support for epidemic control and vows further endeavor to maintain reasonable and sufficient liquidity, the country's financial authorities said earlier this month.
The central bank will use monetary policy tools such as open market operations to release sufficient liquidity into the market, and keep interest rates at a stable level, according to the People's Bank of China (PBOC).
More efforts will be made to strengthen credit support for the manufacturing sector, small and micro enterprises as well as private firms, said a circular jointly released by the PBOC and several other departments, adding that certain fees will be reduced or exempted for listed companies in areas worst hit by the epidemic.
"The virus's impact is likely to be largely a Q1 story," Lucy Qiu, an emerging markets strategist at UBS Global Wealth Management, told Xinhua Thursday.
"Economic growth should rebound from 2Q onwards thanks to policy support and pent up demand as things return to normal," Qiu added.