China reported a 4.9% economic growth in its third quarter, making it the only major global economy in the world to show an economic increase during a worldwide pandemic.
Economists are estimating that China could see a yearly GDP growth of 2.5% this year while the rest of the world is expected to see a decrease of at least 4% due to the coronavirus pandemic. These projections are setting up China to be one of the most influential economies in the world.
“What you’re seeing now is basically China’s stability premium kicking back in, in the sense that companies now are dealing with a global pandemic, and many of the places that they would move production to aren’t looking so rosy right now,” said Michael Hirson, a practice head for China and Northeast Asia working at the consultancy Eurasia Group.
Hirson then reflected how six-months-ago, if you told economists that China would have one of the most envious economies in the world in the midst of the global pandemic that began in Wuhan, they would’ve laughed. Now, thanks to their strict enforcement of health and safety lockdown procedures, the country has recovered greatly both in terms of Covid-19 cases/deaths, and economically. However, in the beginning the pandemic experts in China were extremely fearful of the future. Xue Yue is the Vice President at Thinova Magnet Co., Ltd., which makes rare earth magnets and sensors for automobiles and electronics, and recently spoke with the media about how in Beijing – where Yue resides – the future looked bleak half a year ago.
“It was like a war. Our director told us, ‘In these critical times, if you cannot hold up your end, I’ll just find someone else to replace you,’ and that was the attitude everywhere.”
Since then, Yue and Thinova have been able to resume product production by negotiating with dozens of villages, workers, and government employees to work around the lockdown, and mandatory Covid-19 testing and other quarantine policies have allowed China to recover immensely in more ways than one.
Daily new cases of Coronavirus are in the single-digits, if that, and any time there’s a subsequent outbreak local authorities respond quickly and swiftly. Just recently after a dozen individuals tested positive for Covid-19 in a hospital in Qingdao, the city responded by shutting down and testing all nine million residents within five days to contain the outbreak and return to a life of normalcy within a week.
These quick responses have allowed industrial factories to reopen, automobile sales to increase, real estate investments to climb at double-digit rates, and a general growth in the economy to occur. Xue also claims that while domestic consumer demand may be low for certain industries in China, international demand is at an all time high.
“Local consumer demand is down because of the uncertainty over whether there will be a second wave of the virus or now, but our clients in North America have been stocking up.”
China’s ability to recover from the virus so quickly has made it a leader in general in terms of how to combat this pandemic. China’s economy will likely continue to grow within the next year as the pandemic continues and international industry demand increases even further. While China will have the ability to provide international economic aid in certain product exports, this will likely cause tensions to rise between China and the US.
The US has long accused China of artificially increasing its trade surplus at the expense of American manufacturers. “The fact that China is back up and running smoothly, and in fact some evidence suggests that China is actually grabbing market share in export industries, will be a cause of concern for U.S. policy makers in particular,” says Hirson.
Exports of home goods and electronics have especially climbed as many individuals are opting to spend their time in quarantine gaming or taking on new home improvement projects. However, these types of purchases only temporarily help boost the economy due to the fact that many of the goods are one-time purchases.
“We should be worried about the Chinese export growth, because for most of the households in Europe or the U.S., once you have got one laptop, you are not going to buy the additional one in the coming months,” said Bo Zhuang, head China economist at research firm TS Lombard.
China’s economy will continue to be closely monitored by economists around the world as a means of helping other countries in their own economic recoveries, and to ensure they remain in a relatively stable place for the foreseeable future.
Eric Mastrota is a Contributing Editor at The National Digest based in New York. A graduate of SUNY New Paltz, he reports on world news, culture, and lifestyle. You can reach him at email@example.com.
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