China’s Ultra-Fast Economic Recovery from Coronavirus
The COVID-19 pandemic hit the global economy hard and, in the first instance, China was no exception. The nation was the epicenter of the outbreak and faced the daunting task of overcoming and recovering from the virus. However, China achieved the remarkable feat of not just recovering from the virus – but bouncing back quickly and strongly.
While the rest of the world continues to grapple with the economic fallout from the virus, China’s economic comeback and rapid growth stand out. This article looks at the methods and success behind China’s ultra-fast economic recovery and how other countries can use the same strategies to rebuild their economies and move forward.
Impact of Coronavirus in China
When the COVID-19 outbreak started in December 2019 in the Chinese city of Wuhan, it quickly spread across the country, with over 82,000 people infected and a death toll of over 4,600. As a result of the severity of the situation, the Chinese government took strict measures to contain the virus by instituting strict lockdowns, travel restrictions and other measures.
As expected, the economic impact of COVID-19 in China was severe. Industrial output, retail sales and fixed asset investment all saw major drops over the period from January to April 2020, with the dual impacts of a decrease in consumer demand and disruption of the supply chain. Even sectors expected to benefit from the pandemic, including the e-commerce sector, saw surprisingly small gains as a result of the extensive measures taken by the government to manage the outbreak.
China’s Rapid Economic Recovery
Despite the initial, negative impacts of the virus, China achieved substantial economic growth in the second quarter of 2020, bouncing back much more quickly than anticipated. This was realized through a five-fold strategy focusing on economic, health, livelihoods, poverty reduction, and digitalization.
Economy: Short-term growth was achieved through increased government spending, particularly in infrastructure projects, tax and fee reductions, easier access to credit, and increasing efforts to facilitate foreign investment.
Health: The Chinese government focused on controlling the virus, developing vaccines and testing techniques, investing in medical equipment and strengthening national health infrastructure.
Livelihoods: Policies aiming to ease the lives of vulnerable populations, including small businesses and households, were implemented. These included suspending business taxes, implementing rent relief and providing subsidies to households, firms and workers in need.
Poverty Reduction: To alleviate and reduce poverty, the Chinese government put in place special measures including launching a new poverty relief fund and increasing social grants.
Digitalization: China invested heavily in digital technologies, particularly Artificial Intelligence and the Internet of Things, to increase efficiency in public services, online health care and telework.
Results and Benefits of China’s Rapid Economic Recovery
The results of China’s recovery plan have been impressive. Retail sales, industrial production and fixed assets investment all rebounded significantly in the second quarter of 2020 compared to the first. Moreover, the country’s GDP grew by 3.2% in the same period, making it the only major economy to record positive growth.
In addition to the economic gains for the country, individuals and businesses were also able to benefit from the measures put in place during the recovery. Households and micro-businesses particularly were able to take advantage of tax breaks, subsidies and rent relief to ease the burden on their finances.
The rapid economic recovery of China from the Coronavirus pandemic has been an inspiration for countries around the world. Its five-fold strategy and fast-acting decisions have enabled the country to not only survive the initial economic blows of the virus, but also to recover quickly and come out stronger than before.
Lessons Learned from China’s Recovery Plan
China’s success in overcoming the crisis in a relatively short time essentially boil down to two points: quick and decisive actions; and focus on quality over quantity.
Quick and Decisive Actions
From the outset, the Chinese government took quick, decisive actions to put their recovery plan into motion. This was reflected in the speed with which they implemented measures such as tax-breaks, rent relief and subsidies, as well as the swiftness with which infrastructure and poverty reduction plans were carried out.
Moreover, China was also proactive in innovating new methods of supporting the economy. This includes making investments in digitalization and technology, as well as encouraging foreign investment and capital influx.
Focus on Quality
Another key lesson that other countries can learn from China’s recovery plan is their focus on quality over quantity. When it comes to reversing economic hardship, it is easy to focus on initiatives that generate immediate profits or short-term economic benefits. However, China realized the importance of investing in long-term projects such as digitalization and poverty reduction initiatives, which contribute to the development of the country.
China’s ultra-fast economic recovery from the Coronavirus pandemic has been an impressive feat achieved in a surprisingly short period of time. The nation’s five-fold strategy and quick decision-making have enabled it to not only contain the virus but also rebuild the country’s economy. Other countries could follow China’s example and similarly bounce back strong by focusing quick, decisive actions and investing in initiatives of quality.
