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China to inject economy with $174 billion amid coronavirus outbreak

peoples bank of china
The People’s Bank of China.

China’s central bank will inject the Chinese economy with $174 billion on Monday amid growth fears from the impact of the coronavirus outbreak.

The People’s Bank of China issued a statement on Sunday announcing that 1.2 trillion yuan ($174 billion) worth of liquidity will be injected into the markets through reverse repo operations on Monday, marking the biggest single day addition ever.

Investors are expecting a volatility in Chinese markets when it opens on Monday after an extended break for the Lunar New Year. Markets in the country have been closed since Jan 23 and were due to re-open last Friday.

The virus has left many major cities across the country in complete or partial shutdown. While Chinese financial regulators have said that the economic impact of the virus will be “short term”, some analysts believe the virus could hit growth in the country for a prolonged period.

A number of factories have temporarily stopped operating amid the outbreak, while some major international companies such as Toyota, Foxconn, Starbucks and Volkswagen have outright paused operations or shut outlets in the country.

All China regions have confirmed coronavirus cases.

Economist George Magnus, associate at Oxford University’s China Centre, was quoted by the BBC as saying:

“The coronavirus repercussions on the economy mark the latest in a series of setbacks in the economy over the past year, including a handful of bank failures sparking contagion fears, forcing the central bank to become ever more generous with the provision of liquidity to markets.”