Why is China’s economy still resilient after the COVID-19?

2020 is an unusual year. The sudden COVID-19 severely disrupted people’s normal lives and caused a period of economic stagnation. The indirect impact such as food crises, inflation, economic recession, and social unrest frequently occur, which amplifies the impact of the epidemic.

Under the crisis, it is more important to avoid risks than pursuit profit. As the epicenter of the epidemic, Europe and the United States are gradually losing the role of the “International Capital Safe Island”. Since China took the lead in controlling the epidemic. And with a series of measures expanded, it highlights the resilience of China’s economy to withstand shocks.

Despite a year-on-year decline in economic indicators such as China’s GDP in the first quarter, China has been actively promoting work resumption after the initial relief of the epidemic. Why is China’s economy resilient? These answers may help.

Judging from the current situation and future development trend, the resilience of China’s economy mainly comes from four aspects:

The first one is the long-term accumulated material foundation and complete industrial system. In 2019, China’s GDP is about 100 trillion yuan, and its GDP per capita exceeds US 10,000 dollars. China has the largest information and communication network, the grain output has been stable at more than 650 million tons for five consecutive years. The foreign exchange reserves have remained above $ 3 trillion… All of these are an important basis. At the same time, China has all the industrial categories in the UN industry classification. The complete industrial categories and the continuous improvement of production conditions make China have a strong ability to resist risks.

Second,  the structural adjustment has enhanced economic stability. In recent years, China has accelerated the transformation of industrial structure and demand structure. In 2019, the service industry and final consumption expenditure contributed more than 50% of economic growth. According to the general situation, after the per capita GDP exceeds 10,000 US dollars, the upgrade of consumption will drive the rapid growth of the service industry and consumption. China’s large population and continuous growth in consumption have strengthened its confidence in dealing with external risks. In the first quarter of 2020, the number of enterprises in the information transmission, software, and information technology service industries increased by 13.2% year-on-year, and the China online retail sales increased by 5.9%. The new economy, represented by new industries, new formats, and new models, played an important role in this fight against COVID-19.

The third is precise and effective macro-control. Since the founding of the People’s Republic of China, the government has continuously improved the macro-control mechanism and accumulated rich experience. Facing the epidemic situation, the government actively promoted the prevention and control of the epidemic, guaranteed economic and social development, and continued to issue a series of policies such as tax reduction and fee reduction during the epidemic period to promote work resumption.

The fourth is the institutional advantage of concentrating on major affairs. During the epidemic, the people of the whole country were united, and the government concentrated on supporting Wuhan, Hubei. National finance fully supported the free treatment of patients. The prevention and control of the epidemic were timely and effective, which fully demonstrated the advantages of the socialist system with Chinese characteristics.

The COVID-19 is a major public health emergency that has occurred in China, which is in the fastest spread, the widest infection range, and the most difficult prevention. Compared with SARS and the international financial crisis, the epidemic has a wider impact, deeper impact and longer duration. The domestic epidemic situation has initially eased, but the development of the international epidemic situation is still evolving. There is still the possibility of a second impact. This is still a challenge for China, which has to be alert.