ExplainerWhy Wuhan is so important to China’s economy and the potential impact of the coronavirus

Wuhan, the hub of transport and industry for central China, has been sealed off to contain the spread of the deadly outbreak

Known as the ‘thoroughfare of China’, restrictions on its transport links will impact the economy outside the city, according to The Economist Intelligence Unit

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Wuhan is the hub of transport and industry for central China. Photo: Shutterstock

Published: 5:30am, 24 Jan 2020Updated: 2:31pm, 17 Feb 2020

Concerns are mounting about the economic toll from a deadly outbreak of coronavirus in the central Chinese city of Wuhan, a transport hub that is home to more than 11 million people and a major engine of growth in the world’s second largest economy.

Public transport in and out the city – including trains, planes and ferries – ground to a halt on Thursday morning as authorities placed the city on lockdown to try to contain the spread of the Sars-like virus that has already killed 17 people and infected hundreds more.

The quarantine measures are the first time Beijing has sealed off a city to fight an acute infectious disease, stoking public health concerns and raising questions about the effect of the disease on China’s economic growth, which is already at record lows.

“The economic impact for China – and potentially elsewhere – will be significant if the virus continues to spread,” The Economist Intelligence Unit (EIU) said in a report released on Thursday.

The economic impact for China – and potentially elsewhere – will be significant if the virus continues to spread

The Economist Intelligence Unit

The virus could shave between 0.5 to 1 percentage point off China’s gross domestic product growth (GDP) this year against a baseline forecast of 5.9 per cent, the EIU said.

And if the outbreak becomes an epidemic, rising expenditure on health care will limit room for spending in other areas, including on infrastructure investment and other stimulus measures aimed at shoring up the economy, it added.

The economic effect on Wuhan, the capital of Hubei province and the headquarters of major domestic car and steel producers, is likely to be unavoidable.