Li Bijian
Affected by the COVID-19 pandemic, China’s GDP in the first quarter of this year has experienced its first negative growth since the reform and opening-up: a year-on-year decrease of 6.8%. Under the strong leadership of the central and local governments, however, China has efficiently coordinated all related parties of pandemic prevention and control as well as economic and social development, promoting the situation’s improving and achieving phased success. The recovery of order of economic and social operations has accelerated and the decline in the main economic indicators has narrowed. The resumption rate of key projects has reached 92% and the overall employment situation remains steady. The supply of agricultural products is sufficient and basic livelihoods are effectively guaranteed. New industries and new products maintained the momentum of growth against the trend, in particular, online retails, strategically emerging industries and high-tech manufacturing increased by more than 6%. The foreign trade in April performed very well. Facts show that the impact of the pandemic in the short term is generally controllable and will not change the basic trend of China’s economic stability and long-term improvement. These achievements could be mainly contributed to the following three reasons.
China’s system and institution have obvious advantages and China has strong macro-control capabilities, which are conducive to smoothing out economic fluctuations brought about by the pandemic and maintaining a stable and forward-looking situation. Since the outbreak of the pandemic, the Central and Provincial governments have taken various initiatives to send “timely rain” to enterprises, and actively help enterprises to resume normal production and operations in an orderly manner. Relevant departments have strengthened service for projects and especially supported small and medium-sized enterprises to stabilize employment.
Macroeconomic management authorities have intensified their policy adjustments to counteract the adverse impact of the pandemic. Prudent monetary policy has been enforced while more attention has been paid to flexibility and moderation. The People’s Bank of China has set up a special refinancing of 300 billion yuan to continue to increase financial support for key areas such as small and micro enterprises, private enterprises, and manufacturing industries.
Fiscal policies becomes more active and promising. Registration fees of medical product related to pandemic control have been exempted. The government has issued 5 batches of 23 preferential tax policies. From January to February this year, taxes and fees were reduced to 402.7 billion yuan. Among them, in 2020, new tax preferential policies to support pandemic prevention and control and economic and social development have helped to reduce fees and taxes by 158.9 billion yuan.
After the pandemic was brought under control, the government issued a series of targeted measures to speed up the comprehensive recovery of production and living order, to stimulate the vitality of private enterprises, to support the transformation and upgrading of enterprises, thus enabling a stable buffer and transition for economic entities.
Solid economic foundation and sound economic fundamentals are basic guarantees for economic recovery and development. The sudden outbreak of the pandemic inevitably brings a side-impact on the economy and society, but actually, the outbreak has limited impact on China’s economic strength, development pace and regulatory capacity. On the contrary, China’s strong economic resilience and powerful ability to adjust are conducive to defeating the pandemic and maintaining a sound economic and social development momentum.
In the short term, the pandemic may inhibit total social demand and have negative impact on industries such as accommodation, catering, sports and entertainment, transportation, tourism as well as resident consumption. Due to the obstruction of circulation of production factors such as labor and raw materials, some enterprises have difficulties in resuming production and operation. However, in the long run, China has a large economic scale, sufficient market space and domestic demand, and a complete industrial system and supporting capabilities. Those advantages provides China with means and guarantees to eventually overcome the pandemic and achieve the established economic and social development goals and tasks. The innovation-driven system and reform and opening up are not only finitely impacted, but may also usher in opportunities for further advancement. Innovation-driven system and reform and opening up are the two wheels that promote the long-term development of China’s economy.
In the “Global Innovation Index Report” released by the World Intellectual Property Organization, China’s ranking has risen for four consecutive years; the number of invention patents per 10,000 people in China has reached 13.3; 48.2% of the new labor force has received higher education.
In China today, innovation is becoming the number one driving force for development.The step of comprehensively deepening reforms is with steady progress and vigorous momentum. Some important areas and key links have achieved new breakthroughs.
The pandemic is a crisis, and in a sense, an opportunity to force the relevant reform measures to accelerate. Relaxing market access, enhancing linkage effects, optimizing the business environment, and deepening multilateral and bilateral cooperation. China is opening its doors wider and wider.
All-round opening-up provides huge development opportunities and market space for global enterprises.
Foreign companies are optimistic and upbeat about China, and this will not be changed by the pandemic. China is one of the main drivers of world economic growth and the main hub of the global supply chain.
At present, China has taken the lead in responding to the crisis of the pandemic and has vigorously assisted other countries in combating the pandemic and will shoulder important responsibilities in stabilizing world economic growth.
The pandemic is a temporary storm encountered by China, but it cannot change the course of the giant ship.China’s economic strength, motivation and regulatory power are very strong.
As long as China turn pressure into motivation and turn crisis into opportunity, it will restore the order of production and life in an orderly manner. China has confidence and capability to fully release its great potential and strong momentum.
With the collective efforts from every aspects of the society, China will surely achieve its economic and social development goals and continue to move forward firmly towards her rejuvenation. China’s economy is still the indispensable stabilizer and engine of the world economic growth.
—Li Bijian is Consul General of the People’s Republic of China in Karachi.
