Coronavirus: China to pump $170bn into economy amid growth fears

China urged citizens to wear face masks in public places during the spring festivalImage copyright
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Image caption

China urged citizens to wear face masks in public places during the spring festival

China is to pump 1.2 trillion yuan ($173bn; £131bn) into its economy to help protect it from the impact of the coronavirus outbreak.

China’s central bank said the move would ensure there was enough liquidity in the banking system and help provide a stable currency market.

The virus has so far infected more than 14,000 people and claimed 305 lives – all but one inside China.

The money will be deployed when China’s markets reopen on Monday.

It comes after a holiday to mark the Lunar New Year was extended in the hope of reducing the spread of the virus.

Financial regulators in the country have said they believe the impact on China’s already slowing economy will be “short term”.

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But analysts say the impact of the virus – which has left major cities in full or partial lockdown – could harm growth if it lasts for a prolonged period.

China’s travel and tourism sectors have already taken a hit over an unusually quiet Spring Festival break, while Cinemas were forced to close to try to contain the virus.

Meanwhile, numerous factories have suspended production while companies have instructed employees to work from home

Foxconn, Toyota, Starbucks, McDonald’s and Volkswagen are just a few of the corporate giants to have paused operations or shuttered outlets across China.

The country saw economic growth of 6.1% last year – the slowest in around three decades, in part because of its prolonged trade war with the US. A partial trade deal easing tensions was struck earlier this month, but many tariffs remain in place.

Braced for volatility

Over the weekend, China’s central bank announced other measures to bolster the economy in the face of a deepening coronavirus epidemic, including providing banks with 300 billion yuan to lend to affected companies.

Authorities have also relaxed tariffs on goods imported for use in the virus fight – including those from the US.

Investors are bracing for volatility when Chinese markets reopen on Monday. The country’s stock, currency and bond markets have all been closed since 23 January and were due to reopen last Friday.

Global markets have been rattled by the epidemic, with the US SP 500 notching up its worst week since October on Friday.

More on the coronavirus outbreak:

  • Diary of a life in locked-down Wuhan
  • Coronavirus: What it does to the body
  • How quarantine has fought disease through the ages
Media captionThe BBC’s online health editor on what we know about the virus