Virus outbreak cost China 1 trillion yuan loss in Chinese New Year week

A security officer wearing a face mask gives stands in a shopping mall with a number of stores that remained closed in Beijing on Feb. 3, 2020. Most businesses have been seriously hit by the coronavirus outbreak in Wuhan. - AP

BEIJING: China’s coronavirus outbreak cost more than 1 trillion yuan (RM590bil) in losses to the restaurant, tourism and movie industries in first seven days of the Lunar New Year, according to a report by Caixin Global.

The coronavirus, which has killed 362 people and infected more than 17,300 people as of Feb 2, has brought large parts of the country to a standstill.

Chinese people are being forced to stay home, cancel travel and avoid gatherings.

Restaurants and retailers recorded sales of more than 1 trillion yuan in the seven days of the 2019 Lunar New Year’s holiday, but just half of that total is expected for the 2020 holiday, said Ren Zeping, director of the Evergrande Think Tank, in an interview with Caixin.

A manager at a restaurant in Guangzhou told Caixin that it usually averages 500,000 yuan in daily sales during the holiday, but this year it has lost millions, added the economic news portal.

Haidilao International Holding, China’s largest hotpot chain, has said it would close all of its locations on the mainland until Friday. As of the end of June, Haidilao operated 550 restaurants in 116 cities in mainland China.

Jiumaojiu Group, a Hong Kong-listed restaurant operator, has said it would close its more than 300 restaurants till Feb 9.

As many small and medium restaurant operators suffer from lost of revenue, the Association of Guangzhou Property Leasing Industry has urged landlords to waive rent for February and cut rents in half for the next two months.

Chinese property developer Wanda Group, owner of more than 300 shopping malls throughout China, has announced it would waive nearly 4 billion yuan of rents to merchants, according to Caixin Global.

Furniture store operator Red Star Macalline and developer China Resources Land both announced one-month rent waivers for merchants, it added.

The tourism and movie industries are taking an even harder hit after travel agencies were told to suspend all tour groups. Major tourism spots were closed and all eight movies scheduled to debut during the holiday were held back.

Chinese film studios often release major films over the holiday, and “New Year films” are major revenue generators, with 5.9 billion yuan of sales over last year’s Lunar New Year accounting for 10% of the 2019 total.

This year’s New Year films were projected to generate 7 billion yuan of box office revenue.

Last year, tourism revenue totalled 513.9 billion yuan during the first seven days of the Lunar New Year, according to Caixin.

Holiday sales for tourism, movies, restaurants and retail accounted for nearly 7 per cent of first-quarter GDP in 2019.

In the best-case scenario, which assumes the epidemic can be brought to an end by April, China’s GDP growth is expected to slow to 5.4% this year from 6.1% in 2019, economist Ren estimated.

But in the worst-case scenario, that assumes the epidemic to last longer than expected, 2020 growth could slow to 5%, added Ren. - Caixin Global

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China , Wuhan , virus , loss , economy , Chinese , New , Year


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