The lock-down in Wuhan, the center of the outbreak, may have hurt more than it helped by causing panic. (AFP) “If the economy really gets into a tailspin, the challenge for the party will be substantially increased,” said Steve Tsang, director of the China Institute at London’s School of Oriental and African Studies. Locking down Wuhan might have hurt more than it helped by causing panic and was “very damaging to the economy,” said Tsang. “They will have to rethink the lockdown approach,” he said. The ruling party has responded to the mounting economic pressure by promising tax breaks and subsidies to companies hurt by the anti-disease measures. The government needs to “maintain stable economic operation and social harmony,” President Xi Jinping said Wednesday. On Friday, the Ministry of Finance announced that companies with monthly sales below 100,000 yuan ($14,000) will be exempt from value-added and other taxes. It said companies that cannot repay loans might be allowed to invoke “force majeure,” a last-resort legal measure that can waive obligations in disasters. Travel and hospitality were hardest-hit after the government canceled group tours and told businesspeople to put off travel. Airlines canceled thousands of flights and hotels closed. The manager of a travel agency in Shenyang, the biggest city in China’s northeast, said its monthly revenue, usually 100,000 yuan ($14,000), fell to zero. He said the agency still is paying rent and wages of 20,000 yuan ($2,800) a month. “We don’t expect to see a recovery until May or June,” said the manager, who would give only his surname, Xu. “We do hope the government can give us a tax exemption or reduction, but we still have seen no subsidies.” Property sales have fallen to almost zero over the past three weeks. The industry employs millions of people and drives demand for appliances, furniture and other consumer goods. FASTFACT China this week said that companies with monthly sales below 100,000 yuan ($14,000) will be exempt from value-added and other taxes. Du, the real estate salesman, said he usually closes two sales a month and earns 7,000-8,000 yuan ($1,000-$1,100). He needs to make a 3,000-yuan ($430) monthly loan payment whether he works or not. “I have no base salary and live on commission,” said Du, 27. “Without sales, there will be no income.” Chinese leaders already were struggling to shore up economic growth that slowed to 6.1 percent last year thanks to weak consumer demand and a tariff war with Washington. Some economists, citing industry surveys and other data, say real growth already was much weaker than that. The anti-disease measures closed factories that supply the world with smartphones, furniture, shoes, toys and household appliances. That sent shockwaves through other developing countries that supply industrial components and iron ore, copper and other commodities. South Korea and other economies that rely on China as an export market face potential job losses. E-commerce companies are hiring extra workers to cope with a flood of demand as families stay home and buy groceries online. But streets in Beijing and other major cities are still eerily quiet. Auto sales plunged 20.2 percent in January from a year earlier, deepening a 2-year-old decline in the industry’s biggest global market. Sales fell 9.6 percent last year to 21.4 million, well below their 2017 peak of 24.7 million. That is squeezing global automakers that look to China to drive revenue as they spend billions of dollars to develop electric vehicles to meet government sales targets. “Enterprises are under huge pressure,” said a statement by an industry group, the China Association of Automobile Manufacturers. China rebounded relatively quickly from its 2002-03 outbreak of SARS, or severe acute respiratory syndrome, but economic conditions now are less rosy. SARS struck when China was entering a history-making boom powered by construction and exports. Growth peaked at a blistering 14.2 percent in 2007. By contrast, the latest virus hit in the midst of a slowdown. In the smartphone market, Apple, Huawei and other brands face a potential hit because China is both their No. 1 market and global production base. Shipments might fall as much as 50 percent this quarter compared with the final three months of 2019, according to research firm Canalys. There is a “high risk” that component suppliers, with factory workers still stranded in their hometowns by travel bans, “will not be able to ramp up to normal capacity if the outbreak is prolonged,” Canalys said in a report. Apple and other global vendors face a “serious impact” if the virus spreads and those suppliers close, the report said. “The current situation will likely lead to some of the worst ever shipment numbers,” it said.