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China offers tax cuts to blunt economic impact of coronavirus

China ramped up efforts to blunt the potential economic impact of the coronavirus outbreak on Wednesday, February 12, 2020 as Chinese President Xi Jinping pledged tax cuts and other forms of support for businesses.

Xi Jinping
Chinese President, Xi Jinping

The coronavirus outbreak in China has affected tens of thousands of people across the country, triggering lockdowns, travel bans and quarantines for entire regions that threaten to create supply chain bottlenecks and cripple factory operations.

Xi chaired a meeting of the Politburo Standing Committee, China’s top leadership group, which called for tax cuts and the reduction of interest rates to reduce the virus’ impact on private and small businesses.

The committee also called for increased capital investment and the allocation of local funds for the prevention and control of the epidemic, according to state broadcaster CCTV.

China’s local governments have also been tasked with establishing ways to assist companies, especially small and privately owned enterprises, the committee said.

The announcement of the measures came after the Organisation of the Petroleum Exporting Countries (OPEC) downgraded its market forecast because of the outbreak.

The spread of the virus and the newly-named Covid-19 illness it carries hurt demand for transportation fuel at China’s peak travel season for the Lunar New Year, and it affected the industrial sector in the world’s second biggest economy, OPEC analysts noted.

OPEC said global demand for oil will grow more slowly than expected this year expanding by 990,000 barrels per day (bpd) to average 100.73 million bpd this year, which is 230,000 bpd fewer than the 14-country group had projected last month.

“The outbreak of the coronavirus in China during the first half of 2020 is the major factor behind this downward revision,’’ the cartel’s monthly market report said.

The virus, which broke out at a food market in the central Chinese industrial hub of Wuhan in December, is having an impact on the international sports world as well.

Formula One has cancelled the Chinese Grand Prix in Shanghai on April 19 because of the outbreak of the coronavirus; with motorsport federation FIA saying a request from the promoter to postpone the race had been accepted.

Several other sports have been affected, including the world indoor athletics championships in Nanjing, World Cup alpine ski races in Yanqing and the international horse show in Hong Kong.

Football games including those in the Asian Champions League have been rescheduled.

Organisers of the 2020 Olympics in Tokyo from July 24 to August 9 have also expressed their concern.

The number of people infected with the new coronavirus reached 44,653 in China on Wednesday, and Japan became the country with the highest number of cases outside China, reporting 174 infections.

Ninety-seven deaths and 2,015 new infections were reported over a 24-hour interval in mainland China, according to the country’s National Health Commission.

The total death toll in China climbed to 1,113.

Two other patients have died in the Philippines and Hong Kong.

Europe has also been affected by the virus, with nearly three dozen confirmed cases in Germany (16), France (11) and Britain (eight).

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