Sources: Xi warned officials that efforts to stop virus could hurt economy

Feb 11 (Reuters) - Chinese President Xi Jinping warned top officials last week that efforts to contain the new coronavirus had gone too far, threatening the country's economy, sources told Reuters, days before Beijing rolled out measures to soften the blow.

With growth at its slowest in nearly three decades, China's leaders seem eager to strike a balance between protecting an already-slowing economy and stamping out an epidemic that has killed more than 1,000 people and infected more than 40,000.

After reviewing reports on the outbreak from the National Development and Reform Commission (NDRC) and other economic departments, Xi told local officials during a Feb 3 meeting of the Politburo's Standing Committee that some of the actions taken to contain the virus are harming the economy, said two people familiar with the meeting, who declined to be named because of the sensitivity of the matter.

He urged them to refrain from "more restrictive measures," the two people said.

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China coronavirus outbreak spreads across regions
A traveler wears a face mask as he sits in a waiting room at the Beijing West Railway Station in Beijing, Tuesday, Jan. 21, 2020. A fourth person has died in an outbreak of a new coronavirus in China, authorities said Tuesday, as more places stepped up medical screening of travelers from the country as it enters its busiest travel period. (AP Photo/Mark Schiefelbein)
A girl wearing a face mask sits among suitcases at Hong Kong International Airport in Hong Kong, Tuesday, Jan. 21, 2020. Face masks sold out and temperature checks at airports and train stations became the new norm as China strove Tuesday to control the outbreak of a new coronavirus that has reached four other countries and territories and threatens to spread further during the Lunar New Year travel rush. (AP Photo/Ng Han Guan)
Travelers wearing face masks gather at Hong Kong International Airport in Hong Kong, Tuesday, Jan. 21, 2020. Face masks sold out and temperature checks at airports and train stations became the new norm as China strove Tuesday to control the outbreak of a new coronavirus that has reached four other countries and territories and threatens to spread further during the Lunar New Year travel rush. (AP Photo/Ng Han Guan)
Staff in biohazard suits hold a metal stretcher by the in-patient department of Wuhan Medical Treatment Center, where some infected with a novel coronavirus are being treated, in Wuhan, China, Tuesday, Jan. 21, 2020. Heightened precautions were being taken in China and elsewhere Tuesday as governments strove to control the outbreak of the coronavirus, which threatens to grow during the Lunar New Year travel rush. (AP Photo/Dake Kang)
Peatones con máscaras de protección en una zona comercial de Tokio, el jueves 16 de enero de 2020. (AP Foto/Eugene Hoshiko)
Health workers wear protective gear Wednesday, Aug. 27, 2003, in Ward E3 of the Alice Ho Miu Ling Nethersole Hospital in Hong Kong's New Territories, where 24 patients were quarantined after seven of its health workers developed flu-like symptoms, although none have tested positive for SARS. According to a hospital spokesperson five nurses and two health care assistants working in the hospital's Ward E3 developed symptoms such as coughs, sore throats and fevers on Friday. Hong Kong's health chief, Dr.Yeoh Eng-kiong, said that preliminary test results showed patients' samples did not contain coronavirus that causes SARS and researchers are trying to identify the cause of the illness. (AP Photo/Anat Givon)
WUHAN, CHINA - JANUARY 21 2020: Workers monitor screens for fever signs on passengers detected by infrared detectors at Hankou Railway Station in Wuhan in central China's Hubei province Tuesday, Jan. 21, 2020. A new type of coronavirus has infected hundreds of people in the city.- PHOTOGRAPH BY Feature China / Barcroft Media (Photo credit should read Feature China / Barcroft Media via Getty Images)
WUHAN, CHINA - JANUARY 21 2020: Passengers wearing protective masks walk inside Hankou Railway Station in Wuhan in central China's Hubei province Tuesday, Jan. 21, 2020. A new type of coronavirus has infected hundreds of people in the city.- PHOTOGRAPH BY Feature China / Barcroft Media (Photo credit should read Feature China / Barcroft Media via Getty Images)
WUHAN, CHINA - JANUARY 21 2020: Passengers wearing protective masks walk outside Hankou Railway Station in Wuhan in central China's Hubei province Tuesday, Jan. 21, 2020. A new type of coronavirus has infected hundreds of people in the city.- PHOTOGRAPH BY Feature China / Barcroft Media (Photo credit should read Feature China / Barcroft Media via Getty Images)
WUHAN, CHINA - JANUARY 21 2020: Passengers wearing protective masks walk inside Hankou Railway Station in Wuhan in central China's Hubei province Tuesday, Jan. 21, 2020. A new type of coronavirus has infected hundreds of people in the city.- PHOTOGRAPH BY Feature China / Barcroft Media (Photo credit should read Feature China / Barcroft Media via Getty Images)
BEIJING, CHINA - JANUARY 21: Chinese travellers wear protective masks as they arrive to board trains at Beijing Railway station before the annual Spring Festival on January 21, 2020 in Beijing, China. The number of cases of a deadly new coronavirus rose to nearly 300 in mainland China Tuesday as health officials stepped up efforts to contain the spread of the pneumonia-like disease which medicals experts confirmed can be passed from human to human. The number of those who have died from the virus in China climbed to six on Tuesday and cases have been reported in other parts of Asia including in Thailand, Japan, Taiwan and South Korea. (Photo by Kevin Frayer/Getty Images)
YICHANG, CHINA - JANUARY 21 2020: Travelers wearing protective masks walk outside a railway station in Yichang in central China's Hubei province Tuesday, Jan. 21, 2020. China has stepped up the measures to control the spread of the new coronavirus that has infected hundreds of people in China.- PHOTOGRAPH BY Feature China / Barcroft Media (Photo credit should read Feature China / Barcroft Media via Getty Images)
BEIJING, CHINA - JANUARY 21: A Chinese girl wears a protective mask as her mother pushes her on a suitcase to board a train at Beijing Railway station before the annual Spring Festival on January 21, 2020 in Beijing, China. The number of cases of a deadly new coronavirus rose to nearly 300 in mainland China Tuesday as health officials stepped up efforts to contain the spread of the pneumonia-like disease which medicals experts confirmed can be passed from human to human. The number of those who have died from the virus in China climbed to six on Tuesday and cases have been reported in other parts of Asia including in Thailand, Japan, Taiwan and South Korea. (Photo by Kevin Frayer/Getty Images)
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Local authorities outside Wuhan - where the virus is thought to have first taken hold - have shut down schools and factories, sealed off roads and railways, banned public events and even locked down residential compounds. Xi said some of those steps have not been practical and have sown fear among the public, they said.

China's state council information office did not immediately respond to requests for comment.

The official Xinhua News Agency, reporting on the Politburo meeting last Monday, called the coronavirus outbreak "a major test of China's system and capacity for governance." It added, without details, that "party committees and governments of all levels were urged to achieve the targets of economic and social development this year."

Since the meeting, China's central bank has vowed to step up support for the economy and prepared policy tools to offset the damage. The NDRC said at a weekend briefing that it was urging companies and factories to resume work, especially in "key industries" such as food and pharmaceuticals.

"In the context of the epidemic and the downward pressure on the economy, it is more important to maintain economic growth," Pan Gongsheng, vice-governor of China's central bank, said on Friday.

On Monday, Zhejiang province, an economic powerhouse in eastern China, ordered local authorities not to overreact by restricting everyday movement or shutting down "shops of chain stores and convenience stores that sell daily necessities such as vegetables, cooking oil as well as meat, eggs and dairy products," according to a government release.

China has unveiled new tax policies as it tries to reduce the burden on industries hit heavily by the epidemic.

Reuters reported this month that policymakers in China are preparing measures, including more fiscal spending and interest rate cuts, amid expectations the outbreak will devastate first-quarter growth.

Many in China returned to work on Monday after the Lunar New Year holiday was effectively extended for about 10 days, but morning commutes were far less crowded than usual and numerous factories remained shut.

The ruling Communist Party's propaganda department last week ordered state media to focus on "economic recovery," according to a person with direct knowledge of the order, who declined to be named because of the sensitivity of the situation.

China's official media has been trying to project calm. In a Monday editorial, the official People's Daily urged the public to deal with the epidemic with a "positive mood." 

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