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China central bank says virus outbreak could disrupt economy in Q1, has many policy tools

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China's economy could be disrupted in the first quarter due to the coronavirus outbreak, but it is expected to recover once the virus is brought under control, a vice-governor of the central bank said on Friday.

[BEIJING] China's economy could be disrupted in the first quarter due to the coronavirus outbreak, but it is expected to recover once the virus is brought under control, a vice-governor of the central bank said on Friday.

The People's Bank of China (PBOC) is closely watching the impact of the outbreak on the economy, and is preparing policy reserves to offset the pressure, vice-governor Pan Gongsheng told a news briefing on Friday.

Analysts believe China's first-quarter economic growth could slow sharply by two percentage points or more from 6 per cent in the last quarter, but could rebound sharply if the outbreak peaks soon, much like the pattern during the Sars epidemic in 2003.

Widespread travel and public health restrictions are taking a increasing toll on tourism, restaurants and other parts of the services sector, while many factories have suspended operations until next week or longer.

The PBOC will maintain ample liquidity and deepen interest rate reforms, Mr Pan said. It pumped large amounts of cash into the financial system on Monday to shore up confidence and cut some key money market interest rates.

The death toll from the epidemic in mainland China reached 636 as at the end of Thursday, up by 73 from the previous day. There were 3,143 new confirmed infections, bringing the total so far to 31,161.

China will also implement cuts in taxes and fees, Vice-Finance Minister Yu Weiping said at the briefing.

China Banking and Insurance Regulatory Commission vice-chairman Zhou Liang said he expects banks' non-performing loan ratios to rise somewhat amid the outbreak but said China has ample resources to deal with any rise in bad loans. 

REUTERS