China is seeking to revive the economy without leading to a second round of nCoV infections, and this could be a test many countries are struggling with.
Recovering the economy while new cases of nCoV are emerging could provide experience for countries considering a blockade period to control Covid-19, a drastic move that could lead to a recession. global and millions of people out of work.
Covid-19 started in China, causing the country to shut down almost in January as the number of people infected with nCoV continuously increased. Strict blockade measures and treatment efforts have helped Beijing control the situation. China is no longer detecting new cases in the country, and the order to block the heart of Hubei was removed this week.
However, these measures also made the world’s second largest economy stalled for weeks. The country saw its first decline in decades, while Goldman Sachs analysts said China’s first-quarter GDP in 2020 could plummet 9% year-on-year.
The Chinese government understands that the effort to control viruses will adversely affect the economy and is seeking to ensure the negative consequences will not last.
“Economic losses are becoming unacceptable. I think it is not advisable to wait until the virus disappears completely before starting to re-start production and business,” said Xingdong Chen, a Chinese economist at BNP Paribas, a financial conglomerate, added that Beijing needs to balance economic recovery and vigilance against pandemics.
Western countries are also considering the problem of economic trade with the prevention of Covid-19. President Donald Trump said on March 23 that “the United States will soon reopen its business” despite admitting that the situation of virus infection will be very bad, in the context that the number of infections in the country has increased rapidly and there has been no peak sign.
Meanwhile, Beijing is signaling to convince businesses that life is returning to normal . However, resuming operations of factories and businesses forced China to be cautious. Asian countries that have passed the Covid-19 peak still face the second outbreak when nCoV infected people return from abroad, along with the risk of recurrence if the virus is not eradicated in local communities. .
“The risk of a second outbreak in China is increasing,” said Ting Lu, an economist at Nomura Group of Japan.
China’s economic rescue plan depends on a series of policies to urge workers to return to work, encourage confidence in domestic and international business, and protect as many companies as possible. production as possible.
In addition to billions of dollars to buy medical equipment and treat patients, the Chinese government is also investing huge amounts of money in infrastructure projects to create jobs. It also reduces taxes for small businesses, and requires banks to postpone debts to families and companies that are struggling to help them survive the pandemic.
Chinese state media broadcast the message that it could rebound strongly after Covid-19, calling on foreign companies and investors not to be scared. Xinhua news agency in late February once called Tesla “a symbol of the trust of foreign businesses with China” after the US corporation restarted the giant factory in Shanghai and announced plans to expand production.
As the number of new infections declines, many areas in China have begun to lift the blockade and allow people to move freely, provided they have proof of their health.
China also introduced special measures for the working class . Beijing authorities have asked carriers to set up special routes and trains to bring workers from outside the province “from the door to the factory gate”. 290 million out-of-province workers, who undertake hard work at low but vital wages, are considered the driving force of the economy.
The policy appears to be working, as more than 90% of the industrial conglomerate returned to operation on March 17, according to a report by China’s National Development and Reform Commission. However, small and medium-sized businesses still had difficulties when only 60% reopened at the same time.
Beijing also acknowledges that the effort to revive the economy is risky. The country still finds dozens of new nCoV infections every day, mostly from people from overseas. Hong Kong Special Zone is also worried that the number of new infections is rising again.
“The danger from sporadic infections and local epidemics has not disappeared,” the statement published by the Chinese National Health Commission this week reads.
Some companies resumed operations too early, making it difficult for the economy to recover. A top Chinese titanium manufacturer has restarted the line since February, but had to stop working soon after it found workers infected with nCoV.
Analysts warned that economic recovery pressure and concerns about a second outbreak could lead to a misleading picture of China’s real situation. A number of companies in eastern Zhejiang province, where the government announced most of the industrial facility has returned to operation, are running their machines and turning on all the lights in the factory to consume electricity, creating images. that they are working.
These firms have had a hard time rebooting their chains because of a shortage of manpower, while some localities are not ready for companies to resume operations due to fears that a pandemic will reoccur in a crowded area. people.
“Local authorities and factories know they will be severely punished if the disease spreads, so the safe option is to postpone real production. Strict sanctions are effective when imposed.” order isolating itself, but it will create a threat of risk after the epidemic stops, “said Victor Shih, associate professor at the University of California, USA.
Wrong data on energy consumption has also been criticized by many Chinese experts. Cao Heping, an economics professor at Peking University, warned that this would seriously threaten the economic recovery plan. “If they continue to pretend to work and do not resume real production activities, the national economy will not be able to achieve rapid growth this year,” he said.
Covid-19 in the World
|Bosnia & Herzegovina||168||3|
|Trinidad & Tobago||60|
|Isle of Man||23|
|Antigua and Barbuda||3|
|Papua New Guinea||1|
|St. Vincent Grenadines||1|
|Turks and Caicos||1|
The effect of China’s economic recovery efforts is still unclear, but the ability to overcome the first pandemic provides hope and a learning model for many countries still in crisis.
Officials in many countries are struggling to figure out how long to maintain the blockade to contain the disease without leading to an economic slowdown. Many Western countries are also adopting Chinese measures such as investing in infrastructure and health care projects, as well as cutting taxes to stimulate investment.
“I think most countries will adopt economic stimulus policies,” said David Dollar, a researcher at the Brookings Institution of the United States, and warned that the Chinese model would not be thoroughly applied in the West. .
China owns a number of state-owned corporations and can mobilize workers to enforce isolation orders, while the state infrastructure network is much larger than developed countries in the world and can become an important economic impetus.
“Beijing is reopening many large projects using the state budget, while the private sector plays a more important role in the West,” said Xiaobo Lu, a professor of political science at Columbia University.
“The challenge in the West will be to encourage people to go to restaurants, movie theaters and sporting events to stimulate consumption, instead of sending workers back to the factory. This challenge is very different from China. and depends entirely on the consumer, “Associate Professor Shih stated.