A boy waves a national flag as his dad holds him and uses a smartphone with a selfie stick to take a photo, both wearing protective masks, in front of the portrait of late communist leader Mao Zedong (R, back) at Tiananmen Gate in Beijing on January 23, 2020.
Nicolas Asfouri | AFP | Getty Images
As governments around the world scramble to contain the spread of the coronavirus, the situation in China may have “passed its worst,” according to the regional chief investment officer of UBS Global Wealth Management’s Kelvin Tay.
There is a “semblance that production capability is actually now coming back to the Chinese economy,” Tay said, citing a decline in the number of reported infections in the country.
That will likely make the Chinese economy “the first in the world” to get back on track, he told CNBC’s “Squawk Box” on Tuesday.
Tay’s comments came ahead of Chinese President Xi Jinping’s visit to Wuhan on Tuesday, the city where the disease was first reported and the worst hit in the country. It was his first visit since the outbreak in December.
“Xi Jinping’s visit of Wuhan is a symbolic move that shows China is recovering from COVID-19,” Iris Pang, ING’s chief economist for Greater China, told CNBC’s “Capital Connection” on Tuesday.
But Pang expressed caution. “I am quite wary about this because there are more and more imported cases into China and therefore, the spreading of coronavirus from imported cases and also the recovery of workers work in office and also factories, might also create another wave of coronavirus cases in China,” she said. “So I am not that optimistic.”
Since being first reported in China, the coronavirus has spread across the globe, infecting nearly 114,000 people globally and taking at least 4,000 lives, according to the latest data from the World Health Organization. Recent weeks have seen particularly severe outbreaks in countries such as Italy, one of the euro zone’s largest economies, where quarantine has been expanded to the entire country following a surge in infections and deaths.
Asked about the danger of China seeing a resurgence in cases due to the diseases being imported from overseas, Tay from UBS said: “It’s actually easier for the Chinese to control that” as they can control the airports and ports.
“If you have uncontactable tracing or uncontactable spreads amongst the local population, that is probably a lot more difficult to control,” he said.
Commenting on the potential economic impact of the virus’ spread elsewhere, Tay said 60% of China’s economy is “basically domestic consumption,” adding that this will likely serve as a “buffer” if production can be brought back up to speed and consumption begins again.
In a bid to stem the spread of the disease, the Chinese government locked down cities and quarantined millions of people, as Beijing declared an extended Lunar New Year holiday and temporarily shut down factories and businesses.
Recent economic data have started to point to signs that the world’s second-largest economy took a hit during that period.
Producer prices in China for February fell 0.4% from a year earlier, Reuters reported Tuesday citing official data. That was worse than expectations of a 0.3% decline by analysts in a Reuters poll. Consumer prices for February rose 5.2% as compared to a year earlier, in line with forecasts by economists polled by Reuters.
That came after data released over the weekend showed the country’s January-February overseas shipments contracting 17.2% from the same period a year before, marking the steepest fall since February 2019, according to Reuters.