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Coronavirus outbreak threatens China's economy

Coronavirus outbreak threatens China's economy

Economy
29 January 2020, 16:38 2526
According to experts, people's doubts on products made in China will reduce the import volume of these products
 
Due to the epidemiological situation in China, passengers who have booked tickets for Baku-Beijing-Baku flights to be performed by Azerbaijan Airlines until March 28, 2020, will be able to change the departure date or return the tickets without penalty, Trend reports with reference to the press service of the airlines. For refund tickets, customers may contact sales offices or contact support center via callcenter@azal.az and use the feedback form on the website in case of online purchase: https://help.azal.az/hc/en-us/requests/new.
Azerbaijan Airlines temporarily stops operating Baku-Beijing-Baku flights every year in February. The reason is low demand due to holidays in this country.
Thus, as in previous years, flights to the Chinese capital will be suspended from February and will be resumed starting from March 8, 2020.
Recent events in China, as well as the refund of tickets, have affected the economic ties with the country. It is interesting how the current situation will affect China's market in our country. How can the potential negative outcomes be avoided?
According to economist Rashad Hasanov, the current situation will have a negative impact on economic relations. "China’s economic relations with not just Azerbaijan but with many countries around the world will be impacted, which poses a serious threat to its economy. Generally, the problem can be assessed in two ways. First of all, the indirect impact of the slowdown in the Chinese economy on the Azerbaijani economy, which is a very serious impact. If oil prices drop in China, then prices will also fall on the world market, which could significantly weaken Azerbaijan's export revenues and create some problems with foreign exchange reserves. At the same time, it may also lead to a decline in the state budget revenues from the oil sector. The second way is directly related to trade. Trade between China and Azerbaijan is around 2.3-2.4 billion. We import goods worth about $ 1.7 billion and export $ 750 million. Of course, these figures are huge sums for our country. If our entrepreneurs and businesses operate in a relatively limited space in this country, it will have an impact on exports. That is, the purchase of goods from our country may fall, which, in turn, will slow the pace of development of the non-oil sector. It is likely that in the near future imports from China will also be subject to certain restrictions,” he said.
The economist noted that some countries have already begun this process because the transmission of the virus is possible through both food and other products. "Azerbaijan may also act on this. In this case, the volume of relatively low-cost Chinese products in our country will be reduced. The pressure here will be in two directions. The first is the decline in people's confidence in the products made in China, and, the decline in the volume of imported Chinese products. As a result, the demand for these products will be reduced and the current market price will increase. Time will tell us which of them will be stronger. Most likely, there will be a significant decrease in the total trade volume between China and Azerbaijan for the medium and long term, which will have a negative impact on the export of our country's business products as well as on the population's purchasing power,” he said.
Hasanov noted that this is a very complicated issue, and such cases are considered force majeure. Therefore, Azerbaijan should work as hard as possible to diversify its export market and should try to find alternative markets for its local products.
Economist Parviz Heydarov said canceling flights to China would not affect relations between the countries. "The virus, of course, will affect China's relations with the rest of the world. But when it comes to the relations between Azerbaijan and China, these relations are almost of strategic characteristic. I don't believe that canceling flights to the country will have a negative impact on our relations with China. However, the grave situation will have a significant impact on the sale of Chinese products worldwide, as well as Chinese people traveling to other countries as tourists. As Azerbaijan is also a part of the world, there will be some difficulties with the sale of Chinese products. But this is still a probability. In reality, canceling flights will not affect relations between the countries. Of course, there will be negative impacts on business. However, it should be noted that the relations between China and Azerbaijan are of a wider nature. That is, it is not right to think of it just as trade relations. At a later stage, the deterioration of the situation does not seem real. However, as the virus becomes widespread, it will have a negative impact not only on Azerbaijan-China but on China's economic relations with the rest of the world,” he said.
 
Gunel Azade