How Much Will the Chinese Economy Be Damaged by COVID-19? from buzai232's blog

The COVID-19 outbreak has severely weakened China’s first quarter economic performance. Domestically, the outcome of the government’s policy efforts remains unclear, as the government aims to strike a balance between two, often contradicting, objectives. To get more latest china economy news, you can visit shine news official website.

It hopes to effectively contain the spread of the outbreak and prevent a possible second wave, while also trying to encourage business resumption and sustain economic activities.

Externally, the extent of the COVID-19 outbreak also remains uncertain as the spread continues to unfold. Its likely devastating impact on the world economy will hurt China’s economy significantly, through lower demand for Chinese products and by disrupting global supply chains, which China’s economy is deeply embedded in and heavily dependent upon.

However, if the Chinese government pursues its promised reforms, the economy could see a quick return to growth.

First Quarter Crippled by the One Month Near-Standstill

In retrospect, the Chinese government’s stringent measures were effective in slowing the spread of the virus. The number of daily new confirmed cases outside Hubei Province started to decline in February and in Hubei shortly after. However, consumer consumption during China’s Lunar New Year holiday was largely gone, due to the fear of contracting the disease and the many restrictive measures imposed.

Although the official holidays ended on Feb. 10, business resumption did not take place until early March and has since been slow and partial, meaning that businesses reopened without much production or transaction activities.

This is due to several factors, including logistic bottlenecks to ensure input for production, shortages in workers due to transportation and other restrictions and difficulties in obtaining required supplies to satisfy government anti-epidemic requirements for reopening business. In policy research issued in late March, we projected a 10% decrease in China’s first quarter economy, compared to that of 2019.Early economic policies focused on ensuring logistics for emergency supplies. This was followed by measures to manage social and economic issues, including labor, taxation and business financing. Since February, the government has turned its attention to restarting the economy. Financial authorities announced various measures to meet firms’ financing needs, and other policies were issued to facilitate business operations and reduce costs. These include measures to ensure smooth and affordable transportation, value-added tax reduction, relaxation in land use policy, reducing the cost of utilities and reduction and exemption of insurance premium payments by firms.

Support is also provided by some local governments, such as financial assistance for firms to buy masks and other supplies for business resumption, transportation for returning migrant workers and subsidizing firms’ rent payments.