Workers produce cars in a facility in East China's Shandong Province on December 31, 2019. Photo: cnsphotos

Will China's economic growth fall below 5 percent in the first quarter of 2020 and mark the coun-try's weakest quarterly growth since 1992? It's more likely that the world's second-largest economy will not fall below 5 percent despite the outbreak of the novel coronavirus, according to a new GT Source poll. 

Nine out of 20 well-known Chinese economists and market watchers polled by GT Source rejected the possibility of an economic expansion below 5 percent for the first quarter, while eight believed there was a chance economic growth could slip below that level. The remaining few reckoned it was too difficult to make predictions or stressed that it made more sense to work out supportive measures rather than habitually underscoring a growth target. 

Participants included Lu Zhengwei, chief economist at the Industrial Bank; Xu Gao, chief econo-mist with the Bank of China International; Hong Hao, managing director and head of research at BOCOM International; Sheng Songcheng, a former central bank official; and Wan Zhe, chief econ-omist with the China National Gold Group Corp.

They generally expected the novel coronavirus to be a short-lived black swan event, though they also urged swift actions to contain the spread of the outbreak and help virus-struck businesses. 

The economy's expansion is unlikely to fall below 5 percent in the first quarter from the prior year and it is estimated to grow about 5.7 percent for the whole year, said Lu. 

His suggestions for getting the economy past the epidemic included controlling the flow of people, restoring logistics and having the government share wage costs incurred by the delayed resumption of work in the wake of an extended Spring Festival holiday.

Once the epidemic ends, the economy will rebound quickly, according to Lu, who also noted that the virus is set to spur demand for internet-based services.

As of press time on Tuesday, the death toll of the novel coronavirus rose to 426 domestically, out-numbering fatalities from SARS which killed 349 in the Chinese mainland in 2003. 

The impact of the coronavirus on the Chinese economy will be temporary and remain confined to a handful of provinces, said Zhang Yansheng, chief research fellow at the China Center for Interna-tional Economic Exchanges, a government think tank in Beijing.

"Currently, pessimism outweighs optimism as the number of confirmed coronavirus patients is on the rise. But in 10 days when the spread is controlled, I believe there'll be more confidence in Chi-na's economic growth. Moreover, Chinese economic growth is expected to remain within a reason-able range if the domestic economy rebounds in the following three quarters of 2020," Zhang said.

It's now urgent that the government rolls out supportive policies to return businesses and activities to normal, he advised. China should strengthen its dialogues with other countries and regions to normalize global investment and trade.

Putting quarterly growth at 5-5.5 percent, Liu Xuezhi, a senior economist at the Bank of Communi-cations, said the virus outbreak would deal an apparent blow to the economy during the first quar-ter, but that the impact would be mostly felt by consumption-related businesses.

Industries such as hospitality, catering and cinema have virtually been halted due to strict travel and transport restrictions in places across the country.

Liu remarked that the eventual growth rate depends on whether or not the disease can be effectively contained this month. He suggested monetary authorities could consider offering targeted reserve requirement cuts for badly hit areas, notably Hubei. On the fiscal policy front, an increase in budget deficits would also make sense. If the virus becomes severe, the issuance of special bonds could be an option to relieve pressure on the economy. 

Those who thought economic growth would fall below 5 percent have weighed negative fallout from the virus outbreak more heavily.

It is estimated that the virus will shave 0.5 to 1.2 percentage points off quarterly growth, with bat-tered sectors - travel, catering and entertainment - seeing losses of about 1 trillion yuan ($143 bil-lion), thereby likely to sink growth below 5 percent, said Chen Gong, chief research fellow at Bei-jing-based private strategic think tank Anbound.

The economy expanded by 6 percent in the fourth quarter of last year, unchanged from the previous quarter, official data showed.

Instead of resorting to drastic policy boosts, the government should take measures to stabilize the market and foster growth, said Chen, suggesting the creation of an open, transparent and service-oriented business climate to revive the economy. Other observers were also against an excessive focus on specific growth targets.

"What's important is not whether or not [economic growth] will fall below 6 percent. It's about whether or not companies can survive," said Ma Yu, director of the Department of Foreign Direct Investment Studies at the Chinese Academy of International Trade and Economic Cooperation. 

The nation's current top priority is to prevent and contain the epidemic, but that can't be done at the cost of the economy, Ma commented.

Tax and fee cuts as part of a strong fiscal support matter significantly, and "now is not the time to contemplate if certain growth rates - say 5 percent or even 3 percent - can be achieved. Efforts ought to be made to ensure affected businesses can survive and the economy can stabilize, so as to avoid the worst case scenarios," he emphasized.


Newspaper headline: Q1 growth might be above 5%