China on Friday reported on the state of economic Affairs in the conditions of coronavirus crisis. For the first time since 1992, the Chinese economy showed negative growth, China’s GDP decreased by 6.8%. What are the prospects for the Chinese economy, whether it will be able to resist a slide into deep crisis, what measures does the government to out of this difficult situation, we were told by the experts.
At the beginning of the outbreak, China has imposed tight restrictions on movement and closed some production to curb the spread of the coronavirus. Despite the fact that, overall, the Chinese manage to keep COVID-19 in check, the economy suffers largely because of the crisis are China’s trading partners, orders from abroad are canceled, so that many private enterprises-exporters laying off workers and warned of plant closures in the not so distant future. And this is only one of many aspects of the problem.
“the Main socio-economic indicators in China declined in the first three months of 2020, says “MK” head of the sector of the economy and politics of China, Institute of world economy and international Affairs. Yevgeny Primakov (IMEMO), Sergey Lukonin. In the most critical position is, of course, the sphere of consumption. It is also evident that reduced the rate of growth of GDP in the first quarter of 2020. But it is important to understand that this is not a negative value. Chinese government in January started to think about what it would be nice to launch a program to stimulate the economy that includes a variety of measures”.
According to experts, such measures include tax breaks and direct payment of money in the form of electronic checks to the population most affected by the effects of coronavirus. These measures are inconclusive, as the government continues to develop additional. Most of them will be aimed at stimulating domestic consumption and, of course, to reduce the burden on small and medium enterprises.
“China has introduced tax breaks and reduced VAT, – continues Sergey Lukonin. In some cases this reduction on a limited amount of time happened to zero. In addition, for a certain part of the population reduced lease payments. They also be reduced if private companies withdraw municipal or state territory”.
in Addition, the Central Bank of China is now working out a program of lower interest rates on certain types of lending. In particular, the expert said, this applies both to credits for refinancing of debts and the payments of wages to employees, etc.
“At the initiative of the Chinese government in the country there is also a reduction in certain types of circuit boardsurchins for consumption of particular services. For example, now in China has ceased to take money for the use of toll roads, reduced the cost of port charges. The state also launched and subsidies for rail transport”.
Sergei Lukonin believes that currently one of the major challenges for the Chinese economy was the problem of exports on the background of the development of the pandemic.
“If the coronavirus has not reached the United States and European Union countries, the Chinese economy could have recovered by stimulating domestic demand for the second half of 2020. Exports to China are still important, despite the fact that its importance for the country is gradually declining. You need to understand that the state may suffer quite serious losses, which can have an impact on economic development in General. But these factors, of course, will not lead to the collapse of the Chinese economy”.
“Beijing is definitely not for the hand of world crisis”
On the positive trends in the economic recovery of China announced the “MK” and head of “Russian dream and the Chinese dream” Izborsk club, orientalist Yuri Tavrovsky.
“the Chinese economy recover quickly, – says the expert. – Improve the production and transport chain. According to estimates of the Chinese themselves, major industry, especially the state, restored to 95%. The problems are only with a market economy, which provides about 60% of GDP and 80% of jobs in the country. Therefore, the Chinese government is “flooded with money” these problems. Made very large tax benefits, subsidies and credits.”
Yuri Tavrovsky also stressed that China has problems with those industries that are focused on foreign markets, as overseas economic situation, and with each day only getting worse. And, of course, this fact strongly enough impact on Chinese export. Export still accounts for about one third of China’s GDP. According to the sinologist, about some improvement in this matter we can talk a minimum of 3-6 months.
“There are for the PRC and the positive side of the global economic crisis, said Yuri Tavrovsky. Is, first and foremost, the falling prices of oil, gas and metals. The Chinese are now buying these natural resources, replenish the warehouse and create strategic reserves. But, despite these factors, Beijing is not exactly at hand, the crisis caused by the dangerous virus. They would prefer that everything remained as before.”
experts believe that China due to certain stabilization measures will emerge from the crisis with minimal losses. In this country will help the economy under control.
“the Chinese economy, both market and state under the oversight of the Comm��Communist party, because it controls state-owned banks – continues sinologist. – And they in turn give or do not give loans to private banks and enterprises. And since the party leadership pursues a very clear policy of assistance to producers, markets that are now beginning to recover, population begins to buy more and more goods.”
According to Yuri dabrowskiego, all the traditional Chinese society is mobilized through a system of party organizations and public safety agencies. Therefore, when China faced a crisis on the background of the coronavirus, he was already able to summon their strengths. She’s existed since the days of the trade war with the United States.
“In China was met by a coronavirus not sloppily, as it did most European countries. The Chinese are very quickly adopted very strict measures to curb the infection. And now they are very clear and orderly manner and implement measures to revive economic activity. What is called “socialism with Chinese characteristics”, which in such a crisis shows its best side.”
“China will restore its performance by summer.”
According to Deputy Director of the Institute of Far Eastern studies Andrei Ostrovsky, each country will be able to fully assess the damages caused by the crisis from Covid-19, only in the second quarter of the first half of 2020.
After all, today is quite difficult to predict the losses in full. It is difficult to predict what will be the unemployment rate because of the small and medium business and micro-enterprise after a month of quarantine will simply cease to exist.
“If we talk about China, where the situation is somewhat different, – said the expert. –Of course, the government also suffered substantial losses. Nevertheless, the results of the first quarter almost most of the enterprises have returned to normal. In China mainly affected one province of Hubei, where is the city Wuhan, which began the spread of the pandemic threat. The proportion of Wuhan in China’s GDP is around 4%. In fact, the region is really a very difficult situation. Other provinces also possible to note a certain decline, but not such serious – not 10% and not 15%, and is significantly less”.
moreover, March saw a recovery of production in Beijing, where work started 92% of enterprises. The same indicators can be seen in Shanghai.
All of these factors, according to Andrey Ostrovsky, suggests that China will emerge from the zero index. And install and finally confirm this will be possible in about six months when the country will receive the results for the second quarter of 2020.
“I think that China will restore your displaythe user by the summer, – the expert continues. – And already in Q3-Q4 will gain speed. Of course, the country will not reach the 6% growth of GDP. But 4.5 to 5.5%, they are likely to gain”.
it is Important to note that in China, even during the spread of the virus worked most of the companies. Because the pandemic did not cover the whole country but only parts of it. This is mainly affected Hubei province and Wuhan city, which was completely closed on quarantine. But it is not so much affected the economy of the country, because based share of GDP to other provinces, namely Guangdong and Jiangsu, the so – called “coastal regions
“of Course, from the effects of coronavirus affected and large cities, such as Beijing, Shanghai and Guangzhou, but not to the same extent, – said Andrei Ostrovsky. – China fairly quickly took action and closed more than in January of the 12 cities in which has begun to spread infection. That is, the authorities had taken just those steps that were necessary in such a difficult situation. Including for stabilizing the economy in the country.”
