Viral outbreak a ‘black swan’ for China as it struggles to boost economy

Citi economist Catherine Mann says pneumonia outbreak more difficult to cope with than trade war with US

Travelers wear face masks as they walk outside of the Beijing Railway Station Jan. 20, 2020.

Travelers wear face masks as they walk outside of the Beijing Railway Station Jan. 20, 2020. (AP photo)

TAIPEI (Taiwan News) — The outbreak of a virus in China that has rattled global markets poses a greater challenge to China than the protracted trade war with the U.S., according to an American economist.

Catherine L. Mann, the global chief economist at Citi and chief economist at the OECD, said internal factors weigh more heavily on China's economy than external ones, as it is a gigantic closed economy. She made the remark at a seminar held by the Council on Foreign relations on Wednesday (Jan. 21), reported CNA.

Over the past year, Beijing has embarked on a deleveraging campaign for its debt-laden corporate sector while seeking to mitigate the fallout from the trade conflict with Washington and accompanying tariff hikes by diversifying China's export markets, she observed.

The outbreak of 2019-nCoV, a novel coronavirus that belongs to the viral family that triggered the SARS and MERS epidemics, has emerged as a “black swan” with potentially severe consequences for China, she warned. Containing the outbreak appears to be a tough challenge as China struggles to prop up its economy, with GDP growth, which was estimated at 6.1 percent in 2019, having dipped to its lowest rate since 1990, wrote CNBC.

Jens Nordvig, the founder of Exante Data, said at the seminar that despite the inking of the first phase of a long-overdue trade deal with the U.S. last week and an economy seemingly bottoming out, China has not rid itself of the pressure from tariffs, nor has it picked up enough momentum to recover.

While some experts believe 2019-nCoV to be less lethal than the virus that caused SARS, pneumonia fears have spooked global markets, hurting travel stocks in particular. Citing UBS analysts, CNBC reported that Chinese air carriers can expect passenger growth to slow from 9 to 4 percent this year.