In: Economics
Conduct a research study on the Socio-Economic Impact of COVID-19 in China.
Answer the following questions.
1. Outline any three objectives of the study.
2. Specify both the null and alternative hypotheses to be tested
3. Discuss and motivate the appropriate research design of the study.
4. Specify the type and source of data to be used. 6. Discuss the estimation process of survey data.
Objectives:
1. To understand the impact of corona in Chinese economy.
2. How the pandemic affect their economy
3. Understand the decline in tourism and production sector.
Type of data
Due to the current situation,secondary is only available. So we cannot collect primary data through questionnaires. Because of this reason we cannot conduct different analysis.( Primary data can only collected from Chinese citizens, so we cannot conduct hypothetical evaluations.)
Content
Uncertainties over the Wuhan 2019 Novel Coronavirus (2019‐
nCoV), which has killed at least 1,775 people and sickened more
than 70,000 as of February 17, has interrupted global trade and
supply chains, depressing asset prices, and forced multinational
businesses
to make hard decisions with limited information.
Wuhan has been identified as a principal financial hub for central
China. It is a significant transportation and trade center, hosting
the headquarters of the nation's major local steel and vehicle
makers. The city also serves as home to more than 300 factories of
the
world's best 500 companies, including Microsoft, German software
company SAP, and French car maker Groupe PSA. In recent years, its
monetary development has been recorded to have surpassed
China's national growth, with a GDP growth of 7.8% in 20192 as
against the national average of 6.1%. After the spreading of the
recent viral disease, numerous firms have now evacuated their
expat
workers from the city and temporarily halted business activities.
The strict travel restrictions that have been enforced in Wuhan and
dif-
ferent urban communities in Hubei are expected to have ripple
effects throughout China and beyond, as far as trade is
concerned.
Among the industries that would be negatively impacted, retail,
tourism, and hospitality sectors are likely to be most
affected.
With over 70 000 movie theatres closed down in mainland
China, and several airlines canceling flights to and from China –
disrupting tourism and other business activities – the economic
impact of the novel coronavirus is already extending beyond the
borders of
Hubei. This impact is quite obvious in the rattled stock market. It
is quite interesting how the lockdown of a province with a
population just a bit less than that of France or the UK has
threatened to be a blow to the global economy. This could be said
to be amplified by the
thorough integration of China, the second‐largest economy behind
the US, with the rest of the world. During the SARS‐CoV outbreak
in
China from 2002 to 2003, the global economy was estimated to have
lost roughly $40 billion.9 Currently, as China has an economy
8 to 9 times larger than it had during the SARS epidemic, and is
even more connected to the rest of the world, experts believe that
the total impact of the 2019‐nCoV on global economy could be
quite
huge. As China now contributes approximately 16.3% of the world's
GDP, the country has been the main growth driver worldwide, with
the IMF estimating that China alone accounted for 39% of global
economic growth in 2019.10 This implies that any slowdown in the
nation's economy could likely send waves across the global
economy.
When China reopened its essential businesses on Monday, February 3,
2020, the markets dropped sharply in value due to the extended
Lunar New Year holidays. The benchmark Shanghai Com-posite Index
fell 7.7%, shedding about $375 billion in market value in
its steepest 1‐day decline since August 2015. The Shenzhen
Composite also experienced an 8.4% decline in value. Other business
sectors, retail, consumer services, and transportation stocks too
led
the declines. According to IHS Markit Automotive, 11 of the Chinese
provinces which are on strict lockdown account for more than
two‐thirds
of vehicle production in the country. These provinces equally
supply auto‐parts to carmakers in the US, Europe, and South Korea.
If the manufacturing companies remain idle until February 10, 2020,
the experts believe that there could be production loss of about
350 000
units. This figure could skyrocket to over 1.7 million units if the
outbreak situation continues until mid‐March, equating to
about
32.3% decline from precrisis expectations. Similarly, S&P
believes the nation's auto‐parts production could suffer up to a
50% decline.
Some carmakers have already expressed concerns over the shortage of
car parts. Hyundai has reported the shutdown of its domestic
factories after running out of parts from China. The managers of
various carmakers in the US and Europe have also expressed concerns
over the likely disruptions in business if China does not
resume
a full supply of parts to them within a week.According to industry
consultant LMC Automotive, China's auto market will shrink 3% to 5%
in 2020 if the coronavirus outbreak continues into the second
quarter.Aside the automotive industry, tourism across the world
has
been affected gravely due to the outbreak, as China is
recognized
by the United Nation Tourism Organization (UNWTO) as a true leader
in global tourism, both as a source market and as a leading
destination. The China Outbound Tourism Research Institute observed
that 6.3 million Chinese tourists traveled abroad during the 2019
Lunar New Year holiday, generating travel revenue of
around $73 billion, but the figures have reduced drastically in
2020. The impact on tourism beyond China is also
significant,according to reliable sources. Due to Chinese tours
being canceled
and a general recession in domestic and international
travelers,
Vietnam's tourist industry is expected to lose up to $7.7 billion
in the first 3 months of this year. As Chinese arrivals in
Thailand
are expected to decline by 80% in the first 4 months of 2020, the
governor of the Tourism Authority of Thailand (TAT) estimates
that the nation could loss $3.1 billion in revenue.
When the loss of commerce, trade, tourism, and major impacts on
global supply chains are taken into consideration, the
economic
impacts of the outbreak will be vast both within China and
globally. A market diagnosis completed by Bloomberg economists,
concludes that China's first‐quarter GDP growth may slip to 4.5%
year‐on‐year.
According to an estimated modelling by the same experts, to analyze
the expected losses to different countries across the world, the
global GDP is likely to decline by roughly 0.42% in first quarter
of
the year due to the outbreak.
Some capital economists, however, estimate that, without urgent
global actions to curtail the Wuhan 2019‐nCoV within the
shortest
possible time, China is expected to lose up to $62 billion in the
first
quarter of the year, while the world is likely to lose over $280
billion
within the same period. This conclusion compares closely to the
World Banks estimation that even a weaker flu pandemic, such as the
2009 H1N1 viruses, could still wipe 0.5% off global GDP, which
amounts to approximately $300 billion.