How do they do it? China recovers its economy after the pandemic

The country where the Covid-19 pandemic started begins to rise after a serious economic crisis .

Busy street in China

After the serious economic crisis due to the coronavirus pandemic, China begins to rise up. / Photo: Pexels

LatinAmerican Post | Juan Manuel Bacallado Gómez

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Leer en español: ¿Cómo lo logra? China recupera su economía tras la pandemia

At the beginning of 2020, the information about the strict confinement that the Chinese State resorted to in its large cities was recurrent after the spread of a new type of coronavirus that was transmitted rapidly to the point of being classified in March as a pandemic by World Health Organization. According to the BBC, however, beyond leaving great damage to health with collapsed health centers, the pandemic also brought serious economic problems, especially in China, as it was the first to deal with a strict quarantine for 76 days , in which commerce and industry stopped almost entirely.

Negative figures

The first two months of 2020 were terrible for the Chinese economy. According to La Vanguardia, its industrial production contracted by 13.5%, and this was the largest drop since 1990, but that was not all, since a large part of the economic sectors registered negative numbers, the manufacturing industry It fell close to 16% while energy and water services contracted 7.1%, as did the mining sector by 6.5%.

As a result of the quarantine, retail sales suffered a reduction of 20.5%, which in March would also fall by 15.8%. According to Reuters, Chinese private investment, which represents 60% of national investment, was also decreased by 18.8% in the first quarter of 2020, it would not be until mid-April that the end of the quarantine would be announced under follow-up measures to prevent a second wave.

From less to more

According to the BBC, China's Gross Domestic Product (GDP) increased by 4.9% in the third quarter of 2020, the important thing about this figure is that it reverses the expected annual fall and accumulates a positive number for the end of the year with 0.7% still waiting for the last quarter. However, Forbes notes that several international economic institutions such as the International Monetary Fund (IMF) and the World Bank predict that China will close 2020 with an annual GDP of close to 2%, which despite being below the 6.1% that recorded in 2019, it is still positive taking into account that a global drop of 4.4% is expected, since most countries are still going through an economic crisis.

But how did they do it?

In the first place, it was important to control the Covid-19 outbreak in the first months of the year and maintain the necessary prevention measures, on the other hand, the Chinese State established a set of economic actions in order to make trade circulate again through From a fiscal expenditure that meant the injection of 561,000 million dollars according to the BBC, in addition to tax breaks to reduce taxes on taxpayers to promote improvements in economic conditions, the banking sector also has an important role in reducing interest rates in loans and reduce the minimum reserve of banks , according to the newspaper El Tiempo.

Foreign trade is once again key for China, as this sector has recovered and grew by 9.9% during the third quarter, although the BBC reports that the trade war between the United States and China continues to affect this area. Unemployment also began to reverse as it reached 6% in February, while in September it stood at 5.4%, which is still higher than in 2019.

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More production than sales

According to Forbes, this third quarter industrial production recovered and grew by 1.2%. However, retail sales continue in negative figures with a contraction of 7.2%, which indicates that there is still not enough consumption despite the fact that production is growing due to investments , on the other hand the tertiary sector made up mainly of the provision of software, information, telecommunications and transport services has reappeared by 4.3%.

National tourism

Restrictions to travel outside of China have led to the growth of domestic tourism and even more so with the arrival of the second "Golden Week" held between October 1 and 7, these days are taken as vacations that this time were used within the country , registering the movement of approximately 637 million Chinese tourists that caused the entrance of 69.600 million dollars for the Chinese economy, according to the BBC.

This economic recovery in China and post-Covid19 experience has similarly accelerated global economic growth through the supply of health equipment and materials for both hospitals and for the general consumption of the population, according to El Tiempo, in addition to stimulating the economy through imports, especially at the intraregional level, imports increased by 13.2% in September compared to 2019.