New coronavirus will likely push China to step up stimulus

The Chinese government is beginning to pour out billions to help those affected by the new coronavirus, and analysts expect more support for the economy overall is likely to come. A pneumonia-causing virus emerged about a month ago in the city of Wuhan in the Hubei province. The disease has since killed more than 200 people and spread overseas, prompting the World Health Organization to call the new coronavirus a global health emergency.

The virus is beginning to disrupt China’s economy, although it’s unclear whether the impact will extend to the full year. After saying little about the virus when news of it emerged in late December, Chinese authorities have stepped up their response in the last two weeks.

Wuhan and many cities in the region are under quarantine. The national rail and aviation authorities announced the respective transit operators would refund tickets, primarily those for the travel-heavy Lunar New Year that officially began on Jan. 24. Rail trips on Thursday alone was down 77.6% from the same holiday travel date last year, according to state media.

Back in 2003, the Chinese economy was the sixth-largest in the world versus the second-largest today, and in a period of increasing growth. Official, although frequently questioned, figures showed China’s GDP expanded by 9.1% in 2002, 10% in 2003 and 10.1% in 2004. In recent months, the rate of quarterly GDP growth has slowed, bringing China to 6.1% growth last year.