A vice governor of the People’s Bank of China readied the nation for an economic hit in the first quarter due to the coronavirus outbreak alongside multiple officials that provided assurance and buffers to combat the crisis.

Vice governor Pan Gongsheng also said in a news briefing that economic recovery is expected once the outbreak is contained and that authorities would in the meanwhile prepare measures to offset the effects. Measures include greater liquidity and interest rate reforms, Pan said, following the central bank’s enormous 1.2 trillion yuan ($174 billion) injection on Monday.

Other authorities also made their respective comments to provide assurance to the market including vice finance ministry Yu Weiping who said tax and fee cuts would be implemented and China and Banking Insurance and Regulatory Commission vice chairman Zhou Liang who said that non-performing loan ratios could increase but noted that the country had ample resources to deal with bad debt.

Mobilizing the Sector

All corners of China’s financial apparatus are currently being mobilized to contain the economic impact of the outbreak. 

In addition to looser lending and repayment conditions to support affected businesses and individuals, firms have also sought financing through bond issuance. Wuhan DDMC Culture & Sports, a leisure company in Shanghai, obtained approval from the local bourse to issue 600 million yuan ($71.6 million) of bonds through a «green channel« dedicated for firms hit by the virus. Zhuhai Huafa Group, Sichuan Kelun Pharmaceutical and China Nanshan Development Group collectively issued 2.1 billion yuan ($301 million) of bonds this week via the interbank market to fund similar efforts. 

Insurers were also asked to prioritize coronavirus-related claims while fund managers were urged earlier this week against selling stocks if not faced with redemption pressures, in a move to buoy markets.

The coronavirus outbreak continues to show no sign of slowing down and has now infected over 30,000 individuals in mainland China while claiming at least 638 lives. And the actual reality could be even direr due to suspicions of under-reporting. Although Wuhan is home to nearly 70 percent of coronavirus-linked deaths worldwide, it officially represents only one-third of the total infected cases.