China, a Stabilizing Anchor of the Turbulent World Economy
In April, as spring brings new life in nature, there are also signs that the Chinese economy has been given a new lease on life. As people begin returning to the cities where they work, consumers are heading back to restaurants, cafés, and shopping malls. The rising purchasing managers’ index in March, despite not reaching former levels, nonetheless positively signaled the steady recovery of the country’s economic pulse.
As of the end of March, the work resumption rate of industrial enterprises above the designated size nationwide stood at 98.6 percent, and the rate for small and medium-sized companies was 76.8 percent. International Monetary Fund Managing Director Kristalina Georgieva recently indicated that, with factories resuming production and stock being replenished, China’s economy is expected to recover swiftly and the epidemic’s impact on China’s economy is controllable on the whole.
At the height of the epidemic in China, to cope with the skyrocketing demand for protective medical equipment and gear, a group of Chinese companies quickly repurposed their operations to produce medical products. For example, some home appliance manufacturers including Gree and Midea installed face mask production lines; car maker SGMW independently produced a fully automatic mask-production machine within 76 hours; and Sinopec built a melt-blown fabric plant in 12 days as the fabric is the key material for face mask production.
Meanwhile, the epidemic has created more demand for mobile communication and convenient apps. For example, a lot of places across China have introduced smartphone app-based health code systems to check and collect information about people’s health conditions. This has greatly improved the country’s capacity to efficiently monitor health and facilitated the resumption of work. This is creating a big space for construction and development of new infrastructure based on 5G technology, Industrial Internet, and the Internet of Things.
China is on track to secure a decisive victory in building a moderately prosperous society in all respects in 2020. However, in many rural areas, facilities in some fields like irrigation and water conservancy, health care, and education still need improvement. In some parts of West China, roads and railways still fail to meet the demand for local development. Hence, to improve people’s livelihood and bolster the national economy, it’s necessary to shore up these weak links.
However, as COVID-19 is still impacting the world, China cannot detach itself from an already globalized community. While delaying or even disrupting human movement and logistics, the pandemic threatens to severely affect global economic development. The International Monetary Fund has reassessed the prospect for growth for 2020 and 2021, declaring that the world has entered a recession – as bad as or worse than that in 2009.
The Extraordinary G20 Leaders’ Summit on COVID-19, held on March 26 sent a positive signal for global cooperation in jointly fighting the pandemic. In his speech delivered at the summit, Chinese President Xi Jinping pointed out, “The outbreak has disrupted production and demand across the globe. Countries need to leverage and coordinate their macro policies to counteract the negative impact and prevent the world economy from falling into recession. We need to implement strong and effective fiscal and monetary policies to keep our exchange rates basically stable. We need to better coordinate financial regulation to keep global financial markets stable. We need to jointly keep the global industrial and supply chains stable.”
The proportion of China’s manufacturing output in the world total is already around 30 percent, securing it a very important position in the global industrial chain and supply chain. Meanwhile, being the world’s largest medical protective clothing and face mask producer, also an important exporter of bulk drugs, China plays an important role in the global industrial chain of medical appliances and protective materials. Moreover, China can also contribute its part to maintaining the stability of the global industrial and supply chains by increasing its output of automobiles and electronic appliances to the world market.
China’s optimizing business environment, huge market, and booming new industries make the country a magnet for more and more farsighted international corporations. LEGO Group plans to increase its presence in China by opening 80 retail stores this year, while Tesla is considering further expanding the production capacity of its super factory in Shanghai. In the global value chain, China possesses irreplaceable comparative advantages.
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