Leaders from all over the world call for more international cooperation, but with the state of most countries on lockdown, the possibility to realize this hope is nil. China for example, is already facing pressing domestic issues like debt levels, foreign capital and very slow economic growth. But as the world faces the shock of the novel coronavirus’s effects on global financial markets, China strives to be the stabilizing force and it does this by starting with its own markets.
As we know, China is the second-largest economy in the world and was the origin of, therefore the first to grapple with what’s now known as COVID-19 in Wuhan this past December. This viral disease quickly spread to more than 100 countries thereafter and has killed over 11,000 people worldwide. Thankfully, cases of the newly infected in China continuously dwindle and their government now strives to get businesses up and running again. This is why people look to them as a country that has survived the storm and can now possibly offer is its own experience to the rest of the world, indicating both its limits on a global level, and how its status in a highly uncertain pandemic may offer a light at the end of the tunnel.
While lingering fears of global recession due to the virus outbreak is expected in Asia, the impact of the coronavirus has also had an adverse effect on the other side of the world as it sends the U.S. Treasury yields to record lows. The U.S. stock indexes for example, quickly fell from record highs in February to closing out their worst week since the financial crisis in 2008 just this past Friday. Comparatively though, the S&P 500 dropping nearly 29% for the year so far is exceedingly unexpected, what with the Shanghai composite just down 10%. Lastly, China’s bond markets are the second-largest in the world so stabilizing Chinese markets isn’t out of the equation, which is why it is one of two areas the country’s top administrative body is already planing to work on under the leadership of the State Council’s financial committee.
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