China’s top leaders have doubled down on commitments to contain a coronavirus outbreak and work closely with the World Health Organisation (WHO) and other countries to stop the epidemic from becoming a global health crisis. At a meeting of the Communist Party’s inner circle, the Politburo Standing Committee, President Xi Jinping said local cadres would be punished severely if they failed to heed Beijing’s orders to stop the virus from spreading. “[We] must treat the fight of the outbreak as the most important task at hand,” Xi was quoted by state broadcaster CCTV as saying. But he also said officials had to keep an eye on the economy. The call came as Chinese stocks suffered steep falls in the first day of trading after the extended Lunar New Year break. The Shanghai Composite Index ended the day down 7.7 per cent at 2,746.61, and about 3,000 mainland-listed companies dropped by the 10 per cent daily limit. The warning from the leadership also coincided with accusations from the Chinese foreign ministry that the US response to the outbreak set a “bad example” for other countries. “Most countries appreciate and support China’s efforts to fight against the novel coronavirus, and we understand and respect them when they adopt or enhance quarantine measures at border entry,” ministry spokeswoman Hua Chunying said on Monday. “But in the meantime, some countries, the US in particular, have inappropriately overreacted, which certainly runs counter to WHO advice.” WHO chief calls for caution on coronavirus trade and travel bans The US, which has 11 confirmed cases of the virus, declared a public health emergency last week and temporarily banned foreign nationals who have travelled to China in the last two weeks. It has also issued a level 4 travel advisory, the highest of its kind, warning its citizens against travelling to China. Most major US commercial air carriers have cut or suspended flights to and from China. Hua said the US actions could “create and spread panic”. The outbreak, which is widely believed to have originated from the central Chinese city of Wuhan, has killed 425 people in mainland China. So far, it has spread to more than 20 countries, with the Philippines announcing the first overseas death in relation to the virus . Despite the flood of cases in the past week, WHO director general Tedros Adhanom Ghebreyesus said in Geneva on Monday that there was no need for responses that “unnecessarily interfere with international travel and trade”. In Beijing on Monday, Xi also underscored the need for economic and social stability, saying authorities must ensure that production is maintained and businesses get financial support. “The fight against the outbreak concerns the health of the people, [China’s] opening to foreign countries and the overall social and economic stability,” he was quoted as saying. “In regions where the outbreak is not serious, governments should fight the virus while also considering development and reform.” Coronavirus: Japan quarantines cruise ship that called at Hong Kong Earlier in the day, Lian Weiliang, deputy director of the National Development and Reform Commission, expressed confidence that while China’s economy will take a hit from the coronavirus outbreak, the impact would not last or be as big as the fallout from Sars 17 years ago. “The impact on the economy is gaining weight, especially on transport, tourism, hotels, catering and entertainment,” Lian said. “But … the impact will be temporary and will not change the positive foundation of China’s economy.” China’s economic growth fell two full percentage points in the outbreak of severe acute respiratory syndrome, or Sars, dropping from 11.1 per cent in the first quarter of 2003 to 9.1 per cent in the second. “Many have tried to estimate the impact [of this outbreak] based on the impact of Sars in 2003, but China’s economic power and ability to handle such an outbreak is significantly stronger than in those days,” Lian said. Consumer spending online continued to be strong, particularly on food deliveries, retail and entertainment, he said, without providing specific data. This year is key for China’s economy, with 2020 the deadline for Beijing’s goals of eliminating poverty and achieving a “moderately prosperous society”, or doubling the gross domestic product and per capita income of 2010. Before the coronavirus outbreak, China had already had its lowest level of economic growth in nearly three decades, slowing to 6.1 per cent in 2019. But Lian said he was confident China would reach its target. He said Beijing would try to minimise the impact of the outbreak by first ramping up production of medical and relief supplies. Beijing was also considering ways to support sectors worst-hit by the outbreak, he added. But Louis Kuijs, head of Asia economics at Oxford Economics in Hong Kong, said this outbreak was expected to have a bigger impact than Sars. “This time around a much larger share of China and its population is affected by the virus and the measures taken by governments and companies,” he said. “The connectivity of China’s economy is much higher now.” Kuijs said the forecasting agency now expected China to have 5.4 per cent growth this year, compared to 6 per cent before the outbreak and resulting in 2.2 million fewer jobs. “That may seem a huge number, but needs to be compared to total employment of almost 780 million,” he said. He said the lower growth could also mean that Beijing might just miss its 2020 goals, though the Chinese leadership could still find ways to interpret the target as being reached, he added. Coronavirus tally in epicentre Wuhan may be ‘just the tip of the iceberg’ But Lu Zhengwei, chief economist at Industrial Bank in Shanghai, was more optimistic, projecting a 0.5 percentage point slowdown in growth in the first quarter. He said the drag would not be enough to pull China’s annual growth below 5.6 per cent, the rate needed for the 2020 target. “The share of the economy of the hardest-hit sectors – transport and retail – has dropped [since 2003],” Lu said. “And I think it will take only one to three months before the growth will fully recover, once the alarm is off.” Lu added that the outbreak would also involve new sources of growth, including growing demand for medical equipment and state-led investment in projects like temporary hospitals. Taking their lead from Wuhan , at the centre of the outbreak, a handful of cities, including Beijing and Changsha, have unveiled massive hospital projects to contain the outbreak. Additional reporting by Zhang Shidong and Catherine Wong Purchase the China AI Report 2020 brought to you by SCMP Research and enjoy a 20% discount (original price US$400). This 60-page all new intelligence report gives you first-hand insights and analysis into the latest industry developments and intelligence about China AI. Get exclusive access to our webinars for continuous learning, and interact with China AI executives in live Q&A. Offer valid until 31 March 2020.