BEIJING (Reuters) - China’s exports and imports will fall sharply in January and February as the coronavirus outbreak severely disrupts activity in the world’s second-largest economy, the commerce ministry said on Friday, adding more measures are being studied to support companies.
“The outbreak has posed severe challenges to China’s current foreign trade development,” Li Xingqian, director of the ministry’s foreign trade department, told a news conference that was held online.
“We expect January-February import and export growth to decline sharply,” he said, citing delays in business reopenings and logistics issues in addition to seasonal holiday factors.
With transport restrictions still in place in many parts of the country to contain the spread of the virus, many companies are struggling to resume production due to a shortage of workers and raw materials, while others can’t get their finished products out. Parts shortages are starting to cascade through supply chains worldwide.
China is the world’s largest exporter of goods, with shipments accounting for nearly 20% of China’s gross domestic product (GDP). Analysts forecast the supply and demand shocks from the crisis could cut first-quarter GDP growth by up to half from 6% in the previous quarter.
The outbreak has also brought considerable pressure on the country’s services trade, especially in the tourism and transport sectors, said Xian Guoyi, director of the ministry’s department of trade in services and commercial services.
To cushion the impact on companies, the ministry is speeding up a study of new fiscal, tax, financial, insurance measures to further support companies with other government entities, said Chu Shijia, director of the ministry’s comprehensive department. He did not give details.
The ministry expects foreign companies in most parts of the country to resume production by the end of February. It has advised 32 South Korean auto parts companies in eastern Shandong province to fully resume work before Feb. 15, said Zong Changqing, director of the ministry’s department for foreign investment.
But Zong added there will be a more pronounced impact on foreign direct investment in China in February and March as investors take a more cautious stance amid the outbreak.
Reporting by Jing Xu, Yawen Chen, Judy Hua and Se Young Lee; Editing by Shri Navaratnam and Kim Coghill