#Title

China’s return to normalcy: a lesson for others
Sazzadul Hassan
China is indeed a surprise package! The country, from which the deadly coronavirus originates, seems to have recovered well as not only has it successfully contained the virus, but is also slowly showing signs of a return to normalcy as far as the economy is concerned.
In literally no time at all, this notorious virus has spread all across the planet, infecting millions of people and taking the lives of many. As a result, normal economic activities had to be shut down all around the globe for a number of months.
But the fact remains that even today, most of countries have not been able to resume regular activities while some other nations, known as economic superpowers, are struggling terribly.
In April, the International Monetary Fund (IMF) forecasted a gloomy picture of the world economy. According to them, global GDP would fall by 3 per cent in 2020. However, the IMF revised its forecast in June.
They then projected a further decline in global economic growth, which now stands at minus 4.9 per cent, 1.9 points below the April 2020 forecast.
This clearly shows that the pandemic’s impact was much worse than anticipated during the first half of the year. All major economies, except China, are expected to experience negative growth this year.
According to the IMF, the US, the largest economy in the world, will have negative growth of 8 per cent. While in case of the EU, the figure looks more depressing still with an overall decrease of 10.2 per cent.
Even Germany, known for its rock-hard economic foundation and pragmatic policies, is also expected to experience a decline of 7.8 per cent in GDP growth. The UK’s economy is expected to shrink by 10.2 per cent while France will have negative growth of 12.5 per cent.
Among other major economies, ASEAN countries will also have negative growth of 2 per cent with India’s economy forecasted to shrink by 4.5 per cent.
During the first quarter of the year, China’s economy did struggle badly primarily because of the lockdown. Factories and businesses were shut for most of this period as China introduced strict measures to curb the spread of coronavirus.
As a result, their GDP plummeted by a record 6.8 per cent. To the surprise of many, the world’s second biggest economy returned to a path of growth during the second quarter of the year.
According to a report published by the China National Bureau of Statistics, the country’s GDP grew by 3.2 per cent during that period.
The growth was mainly driven by the primary industry, whose output rose by 9 per cent as most of their factories resumed production from April. Domestic consumption -- which accounted for 57.8 per cent of China’s GDP growth in 2019 -- had become a significant factor during the second quarter of the current year as well.
China cashed in on growing demand for personal protective equipment from all around the world amid the Covid-19 outbreak by exporting such materials worth billions of dollars.
Aside from the aforementioned reasons, the single most important factor that helped China revive its economic growth was its ability to contain the virus with all out measures that included: running an active virus tracking system, adopting a stringent testing policy and conducting regular neighbourhood surveillance to stem the infection chain from expanding.
These stringent measures definitely paid off as China was able to control the virus. As a result, the country reopened its economic activities from the beginning of the second quarter.
The stimulus measures taken by the Chinese government certainly helped its businesses face the challenges as China focused on loosening credit facilities to assist enterprises in overcoming the crisis.
Homi Kharas, a renowned economist and analyst who works at Brookings Institution, said China would emerge as the world’s number one economy in 2028 in absolute terms, using current dollars, two years faster than his pre-coronavirus estimate
Reuters
rEad more on b2