Beijing, February 6, 2020: More than 500 have been reported in China due to Cornonavirus . With lockdown in major cities and number of infections soaring up the economic cost is incessantly rising. In one hand, coronavirus has hit hard the Chinese economy , on the other its ripples are being felt globally.
Industrial giants hold their operations
International companies such as Airbus and Toyota have halted their operations in China. Nike stores and Disney theme parks have also closed. The coronavirus outbreak has not only impacted manufacturing but also tourism in China and neighboring countries. Automobile giant Honda has three plants in Wuhan, the city from where epidemic emerged.
Employees sent on Unpaid leave
The national carrier of Hong Kong Cathay Pacific Airways plans to cut around 90 per cent of its flights to mainland China. It is over concerns of the coronavirus. Cathay will be suspending 30 per cent of its total capacity of flights over the next two months. CEO of Cathay Pacific asked the airline’s 27,000 employees to go on three weeks of unpaid leave. Apparently it was done to avert the crisis faced by airline due to coronavirus outbreak.
Cruise ship and car makers also affected
Thousands of passengers and crew on two cruise ships in Asian waters were placed in quarantine. After few patients were tested positive for the virus around 3,700 passengers were held in isolation facility. On the other hand global car makers have extended the closure of their Chinese manufacturing units. It is in line with the directions of government.
Chinese Stocks Tank
Around $700 billion have been wiped out from Chinese stock markets amid outbread of coronavirus. The Shanghai Composite index closed nearly 8% lower, on Monday. It is the biggest daily drop for more than four years. Manufacturing, materials, and consumer goods companies were among the hardest hit, while healthcare shares soared. The People’s Bank of China (PBOC) unexpectedly lowered short term interest rates. This was done to relieve pressure on the economy from the rapidly spreading virus. It has pumped an extra 150 billion yuan ($22bn; £16.3bn) into the economy on Monday. The move aimed at ensuring there is enough liquidity in the banking system.
Ripples felt globally
Chinese economy constitutes the one sixth of the global economy. Hence it being slowing is nothing favorable globally. In line with travel restrictions imposed by Beijing, Airbus has stopped its production line in Tianjin. The plant builds about six A320 aircrafts per month. As a result its closure will affect the manufacturer’s jet output. The impact on manufacturing output is not confined to China. The South Korean carmaker Hyundai has halted production lines because of disruption to the supply chain. Apple, which has suppliers in Wuhan, said the reopening of some suppliers’ factories had been postponed. These will now open in mid February. Its chief Chinese supplier, Foxconn, is reported to have halted almost all of its Chinese production.