How Does China’s Work Resumption Rate Exceeds 70%?
While many other parts of the world are shutting down to curb the spread of the coronavirus, many businesses in China have resumed operations, as the government continues to engineer moves to revive their economy.
China’s economy, which is the second-largest in the world, has been taking hits since Covid-19 was declared an outbreak. Also, it is the only country to be dealing with the virus for almost three months.
According to official records, this is the second day in Mainland China without a newly recorded case of the domestically transmitted virus. The country has had to enforce strict quarantine measures that have proven very effective but did not spare their economy.
Most of the businesses in China, which managed to weather the outbreak, have reopened. More than 70% assumed to be up and running according to widespread economic news reports.
China’s Economy Influenced by Global Market Despite Beijing’s Uplift Measures
Analysts have observed that despite the careful and well-planned measures by Beijing to revive their economy, the globally spreading Coronavirus has affected economies around the world, a factor that will influence China’s economy.
“Even if you do see the extraordinary level of domestic-resiliency-which I should point out is not yet evident in any of our data- the global spread of COVID-19 has shut down all of China’s major trading partners at just the wrong time.” Stated the Chief Executive Officer of China Beige Book, Leland Miller, via email.”
Miller, whose firm collected data from over 3000 Chinese businesses for their quarterly review of the economy had this to add about the projected state of China’s economy:
“No matter what Beijing engineers do domestically, the growth rate will be capped significantly by what’s globally transpiring.”
Two months into the outbreak, approximately five million people in China had lost their jobs. This caused the unemployment rate to surge to its highest record of 6.2%, according to China’s National Bureau of Statistics. This, together with strict quarantine measures, has caused the economy to slip into 1Q GDP growth.
Three economists from Morgan Stanley, Robin Xing, Zhipen Cai, and Jenny Zheng, predicted further loss of jobs. Even as the country initiated gradual production resumption measures since mid-February. They noted:
“The weakness [in unemployment] has likely extended into March Despite gradual production resumption, as the number of online job listings shrank further by 4.6% in the first two weeks of march.”
While the country has opened up to salvage its economy, the economy is bound to react to the additional pressure coming from the global spread of the coronavirus. And probably will make it harder for China to reach its GDP goals.
How Much Is China Willing To Do For Its Economy While Still Fighting The Outbreak?
The recently published data by China’s National Bureau of Statistics painted a dire picture of the country’s economy. Tom Rafferty, the principal economist for China Renaissance, estimated the growth rate of China’s GDP to have regressed. Numbers show from 5.6% to 3.5%- estimated that by 2021, normalcy will have returned to global supply and demand.
However, if China is still aiming for a higher growth rate even with what is happening in the world right, it would require a dangerous amount of stabilization policies. Rafferty added:
“Our base case is stimulus is coming. It’s not going to be the same level (as it was) in 2009.”
As a global manufacturing hub, China faces huge expectations for its contribution to the world economy. The country is also still vulnerable, especially being the coronavirus epicenter and having fought the virus for the longest.
“Although China might emerge from the coronavirus before others, it is still a long way from returning to normal. And slowdowns in other economies will ripple back to China and dampen demand. China’s imports are likely to return to pre-coronavirus levels any time soon.” Sated Stephen Olson, Research Fellow at Hinrich Foundation.
