Wednesday, March 11, 2020. Shanghai – Over the past few weeks, CEIBS faculty have shared their professional insights on the business and economic impact of the COVID-19 outbreak with media outlets such as Bloomberg, Xinhua, China Daily and CGTN, serving an important guide for policymakers and business owners during this difficult time. Here is a brief round-up of some of the things they have said:

“Normally at this time of the year – right after the Chinese New Year holiday – the central bank would tighten liquidity to keep the markets from overheating. However, what we are seeing now is the release of 1.2 trillion RMB on the same day that 1.05 trillion RMB worth of reverse repos are set to mature, meaning that the central bank is injecting 150 billion RMB in net cash. That’s to fend off risks posed by the coronavirus.”

– Executive Deputy Director of CLIIF and Adjunct Professor of Economics and Finance Sheng Songcheng in Policy easing measures will boost market sentiment, relieve pressure on businesses (CGTN, February 3, 2020)

“The most effective way to reduce any potential impact on the economy is to keep the epidemic under control since the PHEIC status will become due within three months and the WHO could change it at any time, depending on the subsequent developments. Meanwhile, the central authorities have spared no efforts in restoring business confidence.”

– CEIBS Essilor Chair in Accounting Xu Dingbo in Economy still on even keel, say experts (China Daily, February 4, 2020)

“As long as services such as express delivery and logistics are back to normal, the decline in offline sales caused by the epidemic may be largely offset by the increase in online shopping.

China’s digital economy has been a stabiliser amid the virus outbreak, hedging economic risks. Provided that we give play to the respective advantages of corporate, social and government mechanisms, we will definitely see that ‘spring comes after winter’.”

– Professor of Finance and Accounting Oliver Rui in Digital economy helps offset coronavirus impact (Xinhua, February 7, 2020)

“China’s finance industry is probably one of the better prepared sectors for dealing with this crisis. It grew in tandem with the development of the internet and technology, and the advantages of that effort are showing now.”

– Professor of Finance and Accounting Zhao Xinge in China’s Trade-From-Anywhere Markets Face Their Biggest Test (Bloomberg, February 12, 2020)

“For me, the really important thing is not to look at the numbers. China has traditionally had a very strong government. If the government really wanted to, it could easily increase gross domestic product. With a liquidity flood that Li Keqiang has already refused several times, economic growth could easily be increased to over six percent. However, in the current situation, the most difficult thing is to keep the balance: between loosening liquidity to support companies, on the one hand, and on the other hand, avoiding the creation of new bad debts for the banking system.

If the service sector is hit even harder, we will see more social tensions and unemployment. That is why the government, particularly local governments, has started supporting small businesses. [Recently], there have been a lot of small measures that support these companies.”

– CEIBS Vice President and Dean Ding Yuan in Shanghai economic expert: Coronavirus already has “very serious consequences” (Handelsblatt, February 21, 2020)

“[Any new] policies [introduced in response to the virus outbreak] should be seen as a natural extension of the constant pledges by the Shanghai government to continue its opening-up endeavours, stay transparent and be responsive to enterprises’ needs.

The epidemic is no doubt a stress test for the government. But a good handling of the crisis will convince foreign businesses that there is no better place than China to do business in and thrive.”

– Professor of Economics and Finance Xu Bin in Silver lining amid epidemic (China Daily, March 2, 2020)

“An economic downturn caused by negative shocks can generally be hedged by fiscal and monetary policies, which is exactly what the Chinese government and central bank are doing. But what is more important to China’s economy is the long-term GDP trend.

As such, we need to ask ourselves, what toll will the Sino-US trade war and the epidemic have on the long-term growth of China’s economy? And, how should we respond to reduce the long-term negative impact?”

– Professor of Economics and Finance Xu Bin in COVID-19 outbreak a good opportunity for long-term economic reforms (CGTN, March 4, 2020)

“The COVID-19 epidemic will affect consumption in the first quarter and perhaps longer. According to our calculations, China’s lost consumption may be around 1.3 trillion RMB ($187.6 billion USD) in the first three months of this year. Household income may also drop in wake of the epidemic, which in turn will weigh down consumption in the subsequent months.

Regarding exports, there are still many uncertainties with COVID-19 spreading at the global level. But the global spread of the virus will likely disrupt the global supply chain and have a negative impact on China’s foreign trade.”

– Executive Deputy Director of CLIIF and Adjunct Professor of Economics and Finance Sheng Songcheng in Infrastructure investment main tool to offset coronavirus shock to the economy  (Global Times, March 8, 2020)

“During this special time, regulatory innovation should be kept up in time to break through unnecessary policy constraints and give full play to the potential of fintech in serving stores. For example, a full range of online banking services could be promoted and tested in severely affected areas such as Hubei Province. Under the premise of technical support and risk control, pilot banks could open I-type bank accounts for individual users remotely, enabling small and micro business owners and store operators in these areas to open a fully functioning bank account without leaving their home and handle various financial services such as collections, transfers and loans.”

– Professor of Finance and Accounting Oliver Rui in How can China’s government help small businesses navigate cash crunch? (CGTN, March 10, 2020)

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