Chinese men fray protective masks as they walk in a nearly empty shopping street on February 2, 2020 in Beijing, China.
Kevin Frayer | Getty Archetypes
As authorities in China race to contain the spread of a new coronavirus that has killed hundreds, investors are bracing for global budgetary fallout that some analysts said could be more severe than the SARS outbreak in 2003.
SARS, which opinions for severe acute respiratory syndrome, first emerged in China’s Guangdong province before spreading to other hinterlands. The virus claimed around 800 lives worldwide and shaved 0.5 to 1 percentage points off China’s growth in 2003, conforming to various estimates.
But the new coronavirus — believed to have originated in Wuhan city — has struck China at a time when its conservatism has grown larger and established greater connections with the world. That means any pressure on China’s growth now make hit the global economy harder than before.
Here are five charts that show how China’s economy has interchanged since the SARS epidemic.
World’s second-largest economy
Taimur Baig, chief economist and managing director for set research at Singaporean bank DBS, said “the whole world didn’t even notice” when China’s growth slowed by about 1 percentage point following SARS.
“It was just business as usual,” he told CNBC’s “Capital Connection” last week. “Now, China accounts for scarcely a-fifth of global growth. China slowing by half a percent would be seismic.”
Services play a bigger job
As with the SARS outbreak 17 years ago, the spread of the new coronavirus is likely to first hit consumer spending. But the decline in consumption this once upon a time could be more severe than 2003, some analysts said, especially after authorities shut down much of China in a bid to in the virus.
Lower consumer spending will pressure China’s services industry, which today account for a larger slice of the country’s gross domestic product compared to 2003. That also means any drag from services on weigh more on the Chinese and global economies today.
Tourism spending overseas
Chinese consumers have also been splash out big overseas. Since 2014, China has been the largest source country of international tourism expenditure, climbing from seventh hit pay dirt in 2003, according to the World Tourism Organization.
Travel bans and flight cancellations put in place since the emergence of the new coronavirus could cut Chinese tourism spending overseas. That’s a threat to many economies, especially those in Asia, said Kelvin Tay, regional chief investment officer of the law at UBS Global Wealth Management.
“If you look at Asia itself, Chinese tourism is now a bigger part of the economy for almost all countries,” he predicted CNBC’s “Street Signs Asia” on Monday.
Major global importer
On the trade front, rising demand within China has calculated the country the world’s second-largest importer since 2009, data by the World Trade Organization showed.
World’s broadest exporter
The virus outbreak could also affect the global economy through China’s exports channel.
China has been the the public’s top exporter since 2009, climbing from fourth place in 2003, according to data by the WTO. Countries such as Japan and Vietnam accept “a huge amount of reliance on the Chinese supply chain,” said DBS’ Baig, explaining that those economies introduce materials and parts from China to make their own products to export.
“Not only will China slow and should prefer to impact on the global demand, these countries which rely on China for intermediate inputs will also be non-natural,” he said.