http://www.bjreview.com MARCH 12, 2020 BEIJING REVIEW 19
Jiang Yuechun is a research fellow with the China
Institute of International Studies and Zhang Yuhuan
is an assistant research fellow at the institute
Copyedited by Sudeshna Sarkar
Comments to [email protected]WORLD
transportation, tourism, catering and recreation.
Many small and medium-sized enterprises
are struggling as consumption is restricted.
Investment in manufacturing, real estate and
infrastructure has also been constrained.
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the Chinese economy will also be transmitted
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facturing industries such as automobile and
electronics that are relatively more dependent
on China for supply have been impacted by the
virus in the short term.
Take the automobile industry for example.
The 11 Chinese provinces that announced a
delay in work resumption, such as Hubei and
Guangdong, produce two thirds of China’s auto-
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be over 1.7 million units if production cannot be
resumed by mid-March.
Moreover, China is an important exporter of
auto parts, and Japan imports over one third of
its auto parts from China every year. Hubei, the
epicenter of the outbreak, is a major auto part
manufacturing base in China. Due to disruption
in Chinese auto part production, other countries
along the auto value chain, such as Japan, the
Republic of Korea and the U.S., may also not be
able to continue normal production due to lack
of auto parts.
Service sectors in the region will take a hit
due to the sharp dwindling of Chinese tour-
ists. Tourism, transportation and catering in
the Asia-Pacific region, especially in Japan and
Thailand, will be among the hardest-hit. It was
predicted that about 400,000 Chinese visitors
would cancel their Japan trip before March.
From February to June, the number of tourists
to Japan is estimated to decrease by 30 percent
year on year. The Economist Intelligence Unit
of the Economist Group predicted that the virus
might lead to a loss of $80 billion for the global
tourism industry as the volume of Chinese out-
bound tourists will not bounce back to previous
level until the second quarter of 2021.
China is an important destination of exports
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stores shut down and people staying at home
in China, the goods trade between China and
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U.S. soybean exports to China fell to
the lowest level in 10 months, the U.S.
Department of Agriculture said on February
13, although according to the phase-one
trade deal signed between the two countries,
China will import more agricultural products
from the U.S. Exports of good from Australia,
New Zealand and ASEAN to China will also
be impacted. According to a projection by
the International Energy Agency, the global
petroleum demand will increase by only
825,000 barrels per day in 2020, far less than
the previous estimate of 1.2 million barrels
daily.Staying positive
While the short-term impact of COVID-19 on
the Chinese and the overall Asia-Pacific econ-
omy may be more severe than during SARS,
the time the virus is brought under control will
be an important factor determining economictrends in this year. If the epidemic can be con-
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resume or even bounce back sharply. In this
scenario, China’s long-term development will
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will recover sooner.
But if the epidemic can’t be contained in
the short run, the service industry might take
a year to pick up, which means more harm
for both the Chinese and the Asia-Pacific
economy.
The Asia-Pacific is taking countermea-
sures in response to the epidemic. For
instance, China has introduced various
policies encouraging businesses to resume
production, and Southeast Asian countries
including the Philippines, Thailand and
Indonesia have introduced monetary easing
policies.
As long as the spread of COVID-19 can be
effectively contained, the overall economic
growth trend will not be reversed. After the
epidemic is over, the Chinese economy will
resume steady growth, and the industrial sup-
ply chain in East Asia will return to normal. The
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the world economy is expected to resume after
the middle of this year. QGovernment employees
prepare to distribute free
masks among the elderly
and people with low incomes
in South Gyeongsangnam
Province, the Republic of
Korea, on March 4XINHUA