Chinese economy normalizing but stark risks remain - IMF
By Andrea Shalal WASHINGTON (Reuters) - China's economy is beginning to show some signs of normalization after the full-blown shock caused by coronavirus but stark risks remain, International Monetary Fund officials said in a blog on the economic impact of the pandemic.
By Andrea Shalal
WASHINGTON (Reuters) - China's economy is beginning to show some signs of normalization after the full-blown shock caused by coronavirus but stark risks remain, International Monetary Fund officials said in a blog on the economic impact of the pandemic.
Most larger Chinese firms have reopened and many local staff have returned to work but infections could rise again as national and international travel resumes, the officials said.
Outbreaks in other countries and financial market gyrations could also make consumers and firms wary of Chinese goods, just as the economy is getting back to work, they said.
The coronavirus, which has infected 250,000 people and killed more than 10,000, has wreaked havoc on the global economy. In China, the slowdown in the first quarter will be significant, leaving a deep mark on the full year, the IMF said.
"What started as a series of sudden stops in economic activity, quickly cascaded through the economy and morphed into a full-blown shock simultaneously impeding supply and demand," the IMF blog said, citing very weak industrial production and retail sales data in January and February.
But it said China's response thus far showed that the right policies made a difference in fighting the disease and mitigating its impact, albeit with tough economic tradeoffs.
Chinese policymakers needed to be ready to continue to support growth and financial stability, if necessary, and to coordinate internationally, the IMF said.
Helge Berger, the IMF's China mission chief and lead author of the blog, said fiscal policy had an important role to play as Chinese authorities worked to mitigate economic shock and support the recovery.
China is expected to unleash trillions of yuan of fiscal stimulus, backed by as much as 2.8 trillion yuan ($395 billion)in local government bonds, to revive its economy, four policy sources told Reuters on Thursday.
"While it is too early to speak about some of the proposals being discussed, it will be helpful to provide a mix of measures that is on-budget (and) well-targeted to help those most affected by the current crisis," Berger told Reuters.
The blog said China's strict constraints on movement at the height of the outbreak had devastated Hubei province, where the virus originated, but clearly slowed the spread of the disease.
It said Chinese policymakers acted quickly to help vulnerable households and small businesses, waiving social security fees, utility bills and channelling credit through fintech firms, as well as arranging subsidized credit to support scaling up production of medical equipment.
In addition, authorities worked to incentivise banks to lend to smaller firms and cut reserve requirements, while continuing to lend generously to larger firms and state-owned enterprises.
($1 = 7.0950 Chinese yuan renminbi)
(Reporting by Andrea Shalal; Editing by Kevin Liffey, David Clarke and Tom Brown)
This story has not been edited by Firstpost staff and is generated by auto-feed.
By Robin Emmott and John Irish | BRUSSELS/PARIS BRUSSELS/PARIS France and Germany will agree to a U.S. plan for NATO to take a bigger role in the fight against Islamic militants at a meeting with President Donald Trump on Thursday, but insist the move is purely symbolic, four senior European diplomats said.The decision to allow the North Atlantic Treaty Organization to join the coalition against Islamic State in Syria and Iraq follows weeks of pressure on the two allies, who are wary of NATO confronting Russia in Syria and of alienating Arab countries who see NATO as pushing a pro-Western agenda."NATO as an institution will join the coalition," said one senior diplomat involved in the discussions. "The question is whether this just a symbolic gesture to the United States
BEIJING Chinese President Xi Jinping on Wednesday called for greater efforts to make the country's navy a world class one, strong in operations on, below and above the surface, as it steps up its ability to project power far from its shores.China's navy has taken an increasingly prominent role in recent months, with a rising star admiral taking command, its first aircraft carrier sailing around self-ruled Taiwan and a new aircraft carrier launched last month.With President Donald Trump promising a US shipbuilding spree and unnerving Beijing with his unpredictable approach on hot button issues including Taiwan and the South and East China Seas, China is pushing to narrow the gap with the U.S. Navy.Inspecting navy headquarters, Xi said the navy should "aim for the top ranks in the world", the Defence Ministry said in a statement about his visit."Building a strong and modern navy is an important mark of a top ranking global military," the ministry paraphrased Xi as saying.