pursuant to

IBRC19/060420/01/CHN
I > INDEX
China Outlook in face of COVID-19 1

COVID-19’s Impact on China’s Economy 2

Impact on Chinese Local Activities relating to COVID-19 3

Government Stimulus Efforts to Fight the COVID-19

Crisis 4

References 5

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 China Outlook in face of COVID-19
Event highlights from 31 December
2019
• On 31 December 2019, the WHO China Country
Office was informed of cases of pneumonia
unknown etiology (unknown cause) detected in
Wuhan City, Hubei Province of China. From 31
December 2019 through 3 January 2020, a total
of 44 case-patients with pneumonia of
unknown etiology were reported to WHO by the
national authorities in China. During this
reported period, the causal agent was not
identified.
• On 11 and 12 January 2020, WHO received
further detailed information from the National
Health Commission China that the outbreak is
associated with exposures in one seafood
market in Wuhan City.
• The Chinese authorities identified a new type of
coronavirus, which was isolated on 7 January
2020.
Source: WHO, 2020
• On 12 January 2020, China shared the genetic
sequence of the novel coronavirus for
countries to use in developing specific
diagnostic kits.
• As of 2 April 2020, 81,620 confirmed cases of
2019-nCoV have been reported.
• Of the 81,620 confirmed cases, 1,348 cases are
severely ill, 379 are in critical condition.
• 3,322 deaths have been reported while 76,571
cases recovered and discharged.
How did China Manage the Outbreak?
• National authorities are conducting active case
finding in all provinces.
• Since 14 January 2020, 35 infrared
thermometers have been installed in airports,
railway stations, long-distance bus stations,
and ferry terminals.
• Search expanded for additional cases within
and outside of Wuhan City.
• Active / retroactive case finding in medical
institutions in Wuhan City.
• The Huanan Seafood Wholesale Market in
Wuhan city was closed on 1 January 2020 for
environmental sanitation and disinfection.
Market inspection in expansion to other
markets.
• Public education on disease prevention and
environmental hygiene further strengthened in
public places across the city, farmers’ markets
in particular.
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 COVID-19’s Impact on China’s Economy
1. Direct impact on production.

• Chinese production has already been substantially affected by the shutdown in Hubei
province and other areas.
COVID-19 could • Some other countries are also beginning to feel a direct impact as their authorities put in
affect the global place similar measures.
economy in three
main ways: by 2. Supply chain and market disruption.
directly affecting • Many manufacturing firms rely on imported intermediate inputs from China and other
production, by countries affected by the disease.
creating supply • Many companies also rely on sales in China to meet financial goals.
chain and market • The slowdown in economic activity—and transportation restrictions—in affected countries
will likely have an impact on the production and profitability of specific global companies,
disruption, and by
particularly in manufacturing and in raw materials used in manufacturing.
its financial impact • For companies that rely on intermediate goods from affected regions, and that are not
on firms and able to easily switch sourcing, the size of the impact may depend on how quickly the
financial markets. outbreak fades.
However, a great
3. Financial impact on firms and financial markets.
deal depends on
the public’s • Temporary disruptions of inputs and/or production might stress some firms, particularly
reaction to the those with inadequate liquidity.
disease. • Traders in financial markets may or may not correctly anticipate or understand which
firms might be vulnerable.
• The resulting rise in risk might reveal that one or more key financial market players have
taken investment positions that are unprofitable under current conditions, further
weakening trust in financial instruments and markets.

Source: Deloitte, 2020 | 2

 Impact on Chinese Local Activities relating to COVID-19

In early February 2020, Mercer China conducted a quick survey on the impact of the novel coronavirus outbreak on company. A total of 516 responses were
received.
• The majority of companies allow remote working for all employees, most often at normal pay.
• For those employees that are unable to work for longer than one month due to the outbreak, the majority will reduce salary but not to less than 80% of full
pay.
• Emergency, security, and executive units may return to work earlier than other units.
• Typical arrangements companies have made in response to the COVID-19 outbreak focus on health and safety in the workplace.
• Travel subsidies continue to be normal during the delayed work resumption.
• In Beijing, companies are allowing for one parent to work from home at full pay to care for their child.
• The majority of companies are not providing a subsidy to infected employees.
• Companies have not repatriated assignees and for the most part are watching the situation.

Source: MERCER CHINA, 2020 | 3

 Government Stimulus Efforts to Fight the COVID-19 Crisis
The COVID-19 novel coronavirus has caused a crisis for
the world's economy and markets. In response to this
crisis, Chinese government and central bank have
enacted fiscal and monetary stimulus measures to
counteract the disruption caused by the coronavirus.
China (Hong Kong)
Hong Kong announced a significant fiscal stimulus package as part of
its 2020-2021 budget on February 26, 2020. Among other things, it
includes:
• A $1200 cash subsidy to all adult permanent residents.
• Paying one month's rent for people living in public housing.
• Cutting payroll, income, property, and business taxes.
• Low-interest, government-guaranteed loans for businesses.
• Extra month's worth of payments to people collecting old-age or
disability benefits.
Source: Investopedia, 2020
China (Mainland)
China's central bank, the People's Bank of China (PBOC), has implemented
several policy measures aimed at providing monetary stimulus:
• On February 3, 2020, the PBOC expanded reverse repo operations by
$174 billion. This means that the central bank extended the amount of
loans to keep money markets (markets for very short term loans) stable
and allow banks to have more cash on hand. It added another $71 billion
on February 4.
• The PBOC also cut the one-year medium-term lending facility rate (the
rate at which it lends to banks) by 0.10% on Feb. 16. It followed this up by
cutting its one-year and five-year prime rates (the rate at which banks
lend to the most credit-worthy corporations) by 0.10% and 0.05%,
respectively.
• The PBOC lowered bank reserve requirements on March 13, freeing up
about $79 billion to be lent out.
As of mid-march, many local governments in China have been giving out
prepaid spending vouchers to boost consumer spending, but the amounts
are relatively small.
China has yet to implement massive fiscal stimulus. However, the Chinese
government has asked banks to extend the terms of business loans and
commercial landlords to reduce rents.
China is preparing to inject more cash into the financial system, as the
slowing economy faces further pressure in the form of slumping global
demand from the coronavirus pandemic.
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 REFERENCES
1. Business Responses to the COVID-19 Outbreak, MERCER Talent All Access, China. February 2020.

2. COVID-19’s impact on China’s small and medium-sized businesses, International Food Policy Research Institute (IFPRI). March 2020. Retrieved
from World Wide Web: https://www.ifpri.org/blog/covid-19s-impact-chinas-small-and-medium-sized-businesses

3. The Economic Impact of COVID-19 (Novel Coronavirus), Deloitte. Retrieved from World Wide Web:
https://www2.deloitte.com/us/en/insights/economy/covid-19/economic-impact-covid-19.html

4. Government Stimulus Efforts to Fight the COVID-19 Crisis, Investopedia. Retrieved from World Wide Web:
https://www.investopedia.com/government-stimulus-efforts-to-fight-the-covid-19-crisis-4799723#citation-1

5. Novel Coronavirus (2019-nCoV) , World Health Organization. Retrieved from World Wide Web: https://www.who.int/docs/default-
source/coronaviruse/situation-reports/20200121-sitrep-1-2019-ncov.pdf

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