Coronavirus: China’s economy may suffer more than Beijing hoped as manufacturing, service sectors plunge
- Purchasing managers’ indices for both manufacturing and service sectors drop to all-time lows
- Steep falls raise questions over extent of damage epidemic has caused to China’s economy and how long it will take the country to recover
The damage caused by the coronavirus outbreak to China’s US$14 trillion economy could be much worse than Beijing feared, as official measures for the country’s factory and service activity indicated on Saturday, threatening President Xi Jinping’s vision for 2020 and underscoring his urgent appeal to get production back to normal.
Monthly economic indicators for February sank to all-time lows as the coronavirus halted China’s manufacturing machine and froze activity in the service sector – from retailing to recycling – painting a bleak picture of the world’s second-largest economy and challenging Beijing’s repeated assurance that the impact would be manageable and short-lived.
The coronavirus was first reported in Wuhan at the end of December, and since Since then it has spread to more than 50 countries and more than 85,000 people have been infected. The outbreak has disrupted travel and cargo shipments, and caused stock markets to slump.
Larry Hu, chief China economist at Macquarie Capital in Hong Kong, said that Beijing might report negative growth for “the first time since the Cultural Revolution”.