Coronavirus: Chinese President Xi vows to maintain economic growth but corporates revise targets

In a statement on February 13, Chinese President Xi Jinping has vowed to minimize the impact of Coronavirus but it seems the corporate sector is not convinced as several companies are either revising their growth targets or minimizing operations in China.

Coronavirus has caused the death of about 1367 persons in China and 59,805 more are persons are suffering from the infection. But, the implications epidemic is now clearly visible on the economy of China as well as on confidence in the corporate sector. The mood in the corporate sector seems to be so pessimistic that even the assurance of the topmost leaders of the country President Xi Jinping is not able to restore the confidence of the corporates.

"We will also be able to minimize the impact of the epidemic, maintain the momentum of China's economic development, and strive to achieve this year's development goals and tasks," said Xi Jinping. Chinese policymakers have implemented a series of measures to support an economy jolted by the coronavirus outbreak, which is expected to have a devastating impact on first-quarter growth. The statement by the President is being seen as a measure to restore the confidence of investors and corporates in the country.

However, several corporates are either reducing their operations or revising the targets. HSBC, one of the major investors in China on Thursday lowered its first-quarter forecast for mainland China's economic growth to 4.1 percent year-on-year from 5.8 percent due to the fallout from coronavirus. The bank also cut its China full-year growth forecast to 5.3 percent from 5.8 percent, adding the impact was already starting to be felt in tourism, trade, supply chains and elsewhere. HSBC lowered its full-year estimate for global growth to 2.3 percent from 2.5 percent, adding it expected the brunt of the impact in the first quarter, with some improvement as the year progresses. This was despite a report by Chinese state media that the government would strive to achieve economic and social development targets for 2020 despite disruptions caused by the coronavirus outbreak.

Furthermore, the pan-European STOXX 600 index fell 0.5 percent by 0900 GMT due to the Coronavirus epidemic in China. It had notched new highs in the last two sessions on optimism over what appeared to be a decline in new cases of infection, as well as a slow restart in factory activity after an extended break in China. But a jump in new cases after China deployed a new diagnostic method and a record rise in the death toll dashed hopes that the epidemic was slowing and swiftly subdued risk appetite. Besides, the automobile sector also reported slowdown on Thursday. In a report of the China Association of Automobile Manufacturers, the industry witnessed a fall of 20.2 percent in the sale of SUVs. South Korean Car major Hyundai Motors has also reported a loss in its business. The economic implications of Coronavirus in China are also visible in the aviation industry as more than 34 international airlines have stopped operations in the country until further orders.

According to experts, the Coronavirus is hitting hard the economy of China that was already suffering due to trade war with the USA. It was after over 2 years of trade war both the country recently signed a trade deal.