Coronavirus may be peaking, but China’s reboot will be costly
With more than 43,000 cases and 1,000 deaths in China, Chinese firms have already started layoffs and asking for billions in loans to survive
Shanghai — China’s coronavirus outbreak may peak soon, a prominent Chinese expert said on Tuesday, as the death toll soars past 1,000 and worry grows about the true extent of economic disruption to the world’s second-largest economy.
Companies struggled to get back to work after an extended Lunar New Year holiday, while hundreds of Chinese firms said they would need loans running into billions of dollars to stay afloat. Layoffs have also begun, despite assurances by President Xi Jinping that widespread sackings would be avoided.
The government’s top medical adviser on the outbreak, Zhong Nanshan, held out hope that the epidemic may peak in February then plateau before easing. “The peak time may be reached at the ... middle [of] or late this month,” Zhong, an epidemiologist who won fame for his role in combating an outbreak of severe acute respiratory syndrome (SARS) in 2003, told Reuters in an interview.
The number of new cases is already declining in some provinces, he added.
The Chinese National Health Commission said earlier that another 108 people had died on Tuesday, a daily record, taking to 1,016 the total of those killed in China. All but five of the deaths have been in the central province of Hubei, the epicentre of the outbreak.
There were 2,478 new confirmed cases on the mainland by Monday, down from 3,062 the previous day, bringing the total to more than 43,000. It is the second time in two weeks that authorities recorded a daily drop in new cases.
Asian stock markets rallied as investors took comfort from the lower figures, even though some experts have warned it is too early to assume they represent a trend.
Underlining the danger, the head of the World Health Organisation (WHO), Tedros Adhanom Ghebreyesus, said the outbreak is very much an emergency for China but also posed a “very grave threat for the rest of the world”. He was speaking at the opening of a two-day meeting of 400 researchers in Geneva aimed at stepping up research into diagnostics, drugs and vaccines.
Only 319 cases have been confirmed in 24 other countries and territories outside mainland China, according to the WHO and Chinese health officials, with two deaths, one in Hong Kong and the other in the Philippines.
On the economic front, JPMorgan again downgraded forecasts for Chinese growth this quarter, with its analysts saying the outbreak has “completely changed the dynamics of the Chinese economy”.
More than 300 Chinese companies are seeking bank loans totaling 57.4-billion yuan ($8.2bn) to help cope with the disruption caused by locked down cities, closed factories and crippled supply lines, two banking sources said.
Prospective borrowers include food delivery giant Meituan-Dianping, smartphone maker Xiaomi and ride-hailing provider Didi Chuxing, the sources said.
Chinese firm Xinchao Media said on Monday that it has laid off 500 people, or just more than a 10th of its workforce, and restaurant chain Xibei said it is worried about how to pay the wages of its roughly 20,000 workers.
Authorities said they would roll out measures to stabilise jobs, in addition to previously announced cuts to interest rates and fiscal stimulus designed to minimise any downturn.
Analysts at investment bank Nomura said in a note that evidence suggests the virus had “a devastating impact on China’s economy in January and February. We are concerned that global markets thus far appear to be significantly underestimating the extent of disruption.”
Hubei, where the flu-like virus emerged from a wildlife market in the provincial capital of Wuhan in December, reported 2,097 new cases and 103 new deaths on February 10, its health authority said.
Ship in limbo
Public anger over the handling of the outbreak has been rising and Hubei’s government dismissed the provincial health commission’s Communist Party boss, Zhang Jin, and director Liu Yingzi, state media said.
Hubei remains in virtual lockdown, with its train stations and airports shut and roads blocked. Government officials said it will be harder to curb the spread of the virus over the next week as about 160-million people return to their homes across China after the end of the holiday.
The virus has caused chaos in Asia, and spread alarm beyond, with many flights suspended and entry restrictions imposed by governments trying to ward off its spread.
It has also roiled the world of luxury cruises. The Diamond Princess cruise ship with 3,700 passengers and crew remains quarantined in Japan’s port of Yokohama, with 65 more cases detected, taking the number of confirmed cases from the Carnival-owned vessel to 135.
Thailand said it has barred passengers from getting off another Carnival ship, Holland America Line’s MS Westerdam, the latest country to turn the vessel away due to coronavirus fears, though no confirmed infections have been found on board.
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