(Yicai Global) Feb. 12 -- China has not altered its long-term policy agenda to counter the novel coronavirus-caused pneumonia epidemic, Michael Spence, recipient of the 2001 Nobel Memorial Prize in Economic Sciences and honorary dean of the Stanford Graduate School of Business, told Yicai Global in an exclusive interview.

A transcript of the discussion, in which Spence says China and the United States are "still a long way from decoupling," is below.

Yicai Global: Chinese mainland stocks recovered slightly after heavy losses when the markets re-opened, while US and European markets are unfazed by the virus outbreak. What do you make of the reactions from around the globe?

Michael Spence: You can expect volatility as the markets react to uncertainty and to bits of information dribbling in. The market regulators will try to keep the markets and other key parts of the financial system open and functioning to prevent avoidable secondary damage to the economy.

YG: What impact do you foresee on the economy in the first quarter and for all of this year?

MS: This is highly uncertain and depends, as I said, on when the virus peaks out, when people can become reasonably safely mobile again. At this point, it appears the expert epidemiologists don't yet know.

YG: What's your take on the impact on the overall global economy and asset markets for equities, bonds, commodities -- especially oil -- in the short- and long term? How should investors prepare?

MS: I think volatility is the best guess. China's economy has a substantial impact on the global economy, so the overall effect is negative in the short term.

YG: How badly will this outbreak continue to hurt the global value chain and lead to further decoupling of China and the US?

MS: It may add some further impetus to diversification in supply chains, but those pressures are already there. I think we are still a long way from decoupling.

YG: What financial, fiscal and other policy tools does the Chinese government possess to minimize the damage this coronavirus outbreak has caused?

MS: Buffering the economy with fiscal and monetary policies is certainly a sensible part of the policy response. However, some of these tools may have more muted effects than normal. Using digital technology to help keep the financial system running will be important.

YG: What impact will the outbreak have on China's short-, medium-, and long-term policy agenda?

MS: Thus far, I don't think the coronavirus has changed the longer term policy agenda.

YG: What areas need more global cooperation?

MS: Global cooperation is needed in multiple areas. This epidemic is a good example of a case in which cooperation materially helps. But there are so many areas for beneficial cooperation (sustainability, technology, cyber security, trade, investment and more) that a short summary is not possible.

Editor: Dou Shicong