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Phillip Inman, one of the The Guardian’s economic writers, who wrote about the likely impact of the Coronavirus on the Chinese and global economies at the weekend, says some of the optimism among City analysts of a quick bounce back are beginning to evaporate.

Diana Choyleva, a respected China expert who leads the consultancy Enodo Economics, says 2020 is going to be a bad year for China, however much credit it pumps into the economy to keep businesses and consumers borrowing. She says:

The economic fallout from the Wuhan coronavirus, which is more contagious than SARS, is set to be severe. Importantly, investors hoping for a decisive growth rebound once the outbreak is contained are likely to be disappointed.

Beijing will have no choice but to throw money at investment. Even so, the authorities are unlikely to be able to re-energise the economy as they did post-SARS in 2003. China’s structural growth rate has slowed significantly since then, so the short-term hit could well translate into a technical recession.

She says the authorities actions so far have been slow considering the speed at which the virus spreads, leading her to estimate that China’s average GDP growth rate fell to 3.7% last year from 7.2% in 2018. From this weak position, and with mountains of historic bad corporate debts to clear, the country is in a weak position from which to recover.

Help is also unlikely to come from outside China, she says. “The sluggish response of officials in Wuhan and the determination of a secretive regime to keep a tight grip on information about the coronavirus is bound to dampen foreign business enthusiasm towards China.”

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