Hyundai Research Institute: "China's Economic Status Growing... Impact of New Coronavirus to Be Greater Than SARS"

"Prepare for Rapid Cooling of China's Economy"

Due to the impact of the novel coronavirus infection, the Myeongdong shopping street in Seoul is showing a quiet scene despite it being the weekend on the 9th. Photo by Yoon Dong-joo doso7@

[Asia Economy Reporter Yu Je-hoon] As China's economic stature has expanded compared to the past, an analysis has emerged suggesting that the impact of the 'novel coronavirus infection (Wuhan pneumonia)' on the global economy could be greater than in previous similar cases.

On the 9th, the Hyundai Research Institute stated in its report titled "Changes in the Global Status of Chinese Manufacturing" that "As China's position in the global economy and manufacturing has significantly increased compared to the past, there are concerns that the contraction of global economic activities caused by the spread of the novel coronavirus within China will be greater than during the 2003 outbreak of Severe Acute Respiratory Syndrome (SARS)."

According to the institute, China's share of the world's Gross Domestic Product (GDP) surged nearly fourfold from 4.3% in 2003 to 16.3% last year. China's share of global merchandise trade also increased from the 5% range to the low teens during the same period.

The proportion of value added generated in China contributing to the world's final consumption grew from 3.8% in 2005 to 11.3% in 2015. In high value-added industries such as computers, electronics, and electrical equipment, China's value-added contribution ratio expanded to 21.5%.

Korean manufacturing products also heavily depend on Chinese components. In 2015, the share of value added created in China within the total value added of manufacturing products consumed domestically reached 10.9%.

The institute emphasized, "In preparation for a rapid cooling of the Chinese economy, it is necessary to develop scenario-based countermeasures and risk minimization plans regarding the potential impacts on the Korean economy," adding, "It is essential to minimize the transmission of uncertainties such as the acceleration of global economic slowdown due to contraction in global manufacturing and industrial activities, and increased volatility in financial markets, to the domestic financial market and real economy."

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