Open this photo in gallery Medical workers spray antiseptic outside the Shanghai Stock Exchange on Feb. 3, 2020. Yifan Ding/Getty Images

The Chinese government has held up Canada as a bulwark of calm next to the more dramatic U.S. reaction to the spread of the Wuhan virus, drawing Ottawa into the middle of a new spat between the world’s two largest economic powers – even as plunging stock markets reflect widespread panic among people across China.

Shares traded in Shanghai and Shenzhen fell more than 8 per cent Monday – a contraction of roughly US$400-billion – as investor fears overrode a concerted effort by government-affiliated institutions to prop up shares. It may take hundreds of billions of dollars in government financial support to bring stability back to the markets, one scholar warned, as the developing health crisis – which has now killed 425 in China – takes on sharper economic and political dimensions. Another 19,716 cases have been confirmed and a further 21,558 suspected.

And while Beijing struggles to ease fears at home, it is also directly battling those outside its borders that it accuses of exploiting the situation, particularly the United States.

Story continues below advertisement

Washington has told its citizens to avoid travel to China and has banned entry by foreigners who have been to China in the past 14 days. New Zealand, Australia and eight other countries have imposed similar restrictions, which have angered Beijing. On Monday, Hong Kong said it would close all but three entry points from mainland China, including a land crossing and its airport.

On Monday, China’s Ministry of Foreign Affairs lashed out at the United States for spreading fear, setting a bad example and, spokesperson Hua Chunying said, “turning from overconfidence to fear and overreaction.”

The Beijing airport at the moment - long lines of Air China planes, strict health checks, and piles of arriving masks and goggles from Thailand. pic.twitter.com/AFCZk3Cbwf — Nathan VanderKlippe (@nvanderklippe) February 2, 2020

But she specifically praised Canada, whose relations with China have been fraught since the arrest in Vancouver of Huawei executive Meng Wanzhou, for not following the U.S. approach. Canadian Health Minister Patty Hajdu has said the risks to Canada are low and Ottawa sees no need to keep out travellers who have been to China. “Canada believes the entry ban has no basis, which is a sharp contrast to the U.S. behaviours,” Ms. Hua said in a news conference held on the WeChat app.

The comments underscored how, with the Wuhan virus, Canada once again finds itself wedged between China and the United States as those two superpowers continue their economic and political struggle.

However, Ms. Hua made no promises about when Beijing might give permission for a plane chartered by the Canadian government to fly from Hanoi to Wuhan to evacuate 304 Canadians trapped in a sprawling lockdown zone around the epicentre of the virus.

That plane ”is standing by” and will fly to Wuhan “once the Government of China has given authorization to land,” Global Affairs Canada said in a news release Sunday.

For Beijing, concerns about stranded foreigners have commanded less urgency than the scale of the crisis it is confronting among its own people.

Story continues below advertisement

On Monday, China’s President Xi Jinping presided over a meeting of the seven-person Politburo Standing Committee on the virus. The spread of the virus constitutes “a major test of China’s system and capacity for governance,” the committee said, according to state media. The committee urged leaders across the country “to achieve the targets of economic and social development this year and fully support production resumption by enterprises while bringing the epidemic under control.”

In Wuhan, meanwhile, local authorities planned to create 1,000 new beds for virus patients by converting a stadium and the city’s international conference and exhibition centre into hospitals.

The plunge in stock markets defied heavy spending by state-controlled investors in an effort to “help combat negative feelings and anxiety,” said Zhao Xijun, deputy director of the School of Finance at Renmin University. There is good reason, he said, to rein in the confusion among retail investors who have plunged from “heaven to hell,” with a festive Lunar New Year season swiftly blackened by virus fears.

But the market pessimism overwhelmed even the powerful tools wielded by Beijing. To arrest falling markets may take as much as five times the four trillion yuan – $750-billion in today’s dollars – used by China to shield its economy from the 2008 financial crisis, said Wang Fuzhong, a scholar at the Central University of Finance and Economics.

“The virus has seriously damaged China’s production, consumption, exports, imports and investment. It’s like a lethal strike against our country,” Prof. Wang said.

“The most terrible fact is that many small businesses will die,” he said. What’s happening is “not just a short-term phenomenon. It’s a long-term downturn. The effects of this epidemic are very profound and won’t easily be fixed.“

Story continues below advertisement

Tiananme Square and the Forbidden City today - the first Monday after Spring Festival. Shuttered security scan booths, everything else empty save the police. pic.twitter.com/QvZgFarCMR — Nathan VanderKlippe (@nvanderklippe) February 3, 2020

Many reached for comparisons to the SARS epidemic, which in 2003 caused financial losses equivalent to 1.05 per cent of China’s economy. Scholars have estimated the global loss from SARS at US$40-billion.

But China has grown into a far larger economy in the intervening years and is much more tightly interwoven with the rest of the world, factors that considerably raise the stakes for the Wuhan virus.

“The interruption of supply chains could have a snowball effect if stocks of essential electronic components from China are depleted,” ING economists Timme Spakman and Rico Luman wrote Monday.

“And this isn’t necessarily a temporary slowdown. The coronavirus could potentially impact the annual level of world trade in 2020, as it’s not certain that factories and logistics will be able to catch up and fully compensate for earlier delays, given the limited capacity.”

At the heart of all this anxiety lies great uncertainty. It took more than half a year for SARS fears to recede. The response to the Wuhan virus has been far more swift, but so, too, has its spread.

“The epidemic is in its developing stage,” said Li Huiyong, chief macro analyst at Shenwan Hongyuan Securities. “Nobody can judge how severe the negative impact will be because we don’t know how long the battle against this epidemic will last and, most importantly, how long it will take to rebuild everything and restore production after the battle is over.”

Story continues below advertisement

With reporting by Alexandra Li

Our Morning Update and Evening Update newsletters are written by Globe editors, giving you a concise summary of the day’s most important headlines. Sign up today.