China to boost stimulus measures as virus hammers economy

Starbucks and Uniqlo are among the retail outlets closing down across the country, and manufacturers including Toyota Motor Corp have halted production at least for a time. (A woman, wearing a protective facemask, walks past a Starbucks coffee shop (back) walks her dog in Beijing on January 30, 2020. - AFP)

HONG KONG: China is expected to unveil efforts to cushion the economic blow from coronavirus, with the central bank set to keep liquidity ample and the government likely to step up spending.

Authorities will need to break their fiscal rule of a 3% deficit relative to GDP to “slow the downward spiral of economic activities”, according to Li-Gang Liu at Citigroup Inc. Measures such as cutting interest rates and the proportion of deposits banks must set aside as reserves are possible, said Larry Hu, head of China economics at Macquarie Securities Ltd in Hong Kong.