Shenzhen and Shanghai rebounded on positive ground after central bank interventions. But experts predict problems for the real economy. Chinese GDP estimated below expectations in 2020, with devastating effects for Hong Kong and neighboring countries.
Beijing (AsiaNews / Agencies) - Chinese exchanges are registering a recovery for the third consecutive day after the plunge on February 3, on fears about the spread of Wuhan's coronavirus. In the mid-afternoon, Shanghai settled at 1.70% and Shenzhen at 2.90%.
For experts, the stimuli decided by the Beijing financial authorities have positively influenced local markets - and also foreign ones. The People's Bank of China (PBOC) injected over 1000 billion yuan (158 billion euros), cut interest rates, lowered the minimum bank deposit threshold and ordered banks not to ask for the repayment of loans to companies present in the areas affected by the epidemic. Help was also offered by state industries, which bought shares to stabilize the financial market.
In a further sign of confidence, the Chinese central bank said today that liquidity in the banking system is adequate and that no further capital injections are needed.
But while financial markets seem to reward Beijing’s interventions, predictions for the real economy remain dire. Oxford Economics estimates that due to the coronavirus, the Chinese economy will grow less than 4% in the first quarter of 2020 - compared to the same period of the previous year. The growth for the whole year is set at 5.6%, below Beijing's expectations, which before the outbreak of the epidemic had forecast it at 6%. For the world economy, already weakened by the US-China trade war, the contraction should be limited to 0.2%.
According to a Bloomberg study, the commercial "quarantine" of China will have devastating effects for neighboring states, which depend on Chinese imports, especially on the purchase of intermediate goods. Cambodia, for example, purchases 45% of its semi-finished products from Chinese companies, which it then transforms into finished products.
Hong Kong, marked by months of strikes and demonstrations by the democracy movement, is expected to register the most dramatic drop, estimated at 1.8% in the first quarter of the year. The United States and Europe should instead better absorb the repercussions of the economic paralysis caused in China by the pulmonary epidemic.