Coronavirus: China central bank sees temporary economic impact, vows support measures

Shanghai: China’s central bank said it will use various monetary policy tools to ensure liquidity remains reasonably ample, and added that the broader economic impact from a fast-spreading coronavirus outbreak in the country should be temporary.

In multiple statements issued on Saturday afternoon, the People’s Bank of China (PBOC) said that it will appropriately lower lending rates to support firms affected by virus outbreak.

It added that the impact from the epidemic on the broad economy should be temporary. So far, the virus has claimed the lives of nearly 260 people.

Investors are bracing for a volatile session in Chinese markets when onshore trades resume on Monday after a break for the Lunar New Year which was extended by the government due to the virus outbreak.

The statements from the PBOC were jointly issued with banking and insurance, securities, foreign exchange regulators and the finance ministry.

The virus outbreak will have a short-term and temporary impact on the country’s financial markets, said Cao Yu, vice-chairman of the China Banking and Insurance Regulatory Commission (CBIRC), in a separate statement made on Saturday.

He also called on banking sector to offer comprehensive credit support to listed companies that might have reasonable funding needs in the wake of disruptions caused by the epidemic.

The efforts to contain the virus have caused major disruptions and threaten to knock growth in China and globally, just when it looked like some relief was in store following the recent preliminary Sino-U. S. trade deal to defuse their protracted tariff war.

Authorities in China had already stepped up support measures last year when growth in the world’s second-biggest economy slumped to a near three-decade low, as demand at home and abroad shrivelled.