The coronavirus pandemic has wreaked havoc across the world in 2020 and continues to rage on almost one year later. Many countries find themselves within a second wave of the pandemic, further exacerbating the significant economic blows that have forced many places like the UK into recession. China was the centre of the outbreak, but they have managed to bounce back quite unlike any other country so far – read on to find out more.
China Leading the Way
The global economy is currently in a very futile position with national economies on the brink of failure heading into winter, yet China’s GDP is now growing and almost back to pre-COVID-19 levels. Based on the latest GDP data, China leads the way despite their economy shrinking by 6.8% in the first three months of the year when they started to shut down the country. Between July and September, China saw growth of 4.9% compared to the same quarter last year so it is clear that they are recovering pace. Despite the increasing strength of the economy, China still wants to maintain the value of its currency to protect Chinese exports – as was evident in the central bank’s decision to make it cheaper to short the currency in the forex market.
A Different Response
So, why has China managed to bounce back so quickly compared to other places around the world? Being the place where it all started certainly plays a role putting China ahead in terms of timeframe, but this is not the only reason as there are many other regions nearby that are still struggling mightily. China implemented Draconian lockdown measures at the start of the outbreak and population tracking policies which somewhat contained the spread of the virus. On top of this, the Government set aside enormous sums to support growth and employment after the restrictions essentially choked any economic activity.
This approach has differed greatly to many other nations around the world. Many places have tried implementing less stringent measures to stop the spread of the virus as well as reopening too quickly in a bid to balance keeping the economy open along with protecting the health systems, but this juggled approach has not worked as well as China’s more extreme measures.
Lessons to Learn
Many will quickly point out that China has been successful because of the fact that it has an authoritarian regime and resources to implement severe measures. While this is true, you will also notice that there are other countries that have managed a similar recovery such as South Korea and New Zealand. The key lessons to be learnt here are that it is important to be cautious when lifting measures with obligatory testing, mask-wearing and social distancing being enforced. Additionally, sufficient financial support from the government for all sized businesses and money for major infrastructure projects to fuel long-term economic growth.
A Shift in Power?
China is the world’s second-biggest economy, but they could be about to move up on the global stage looking at their recovery from the pandemic. Continuing rhetoric between Chinese and US officials indicates the economic and socio-cultural rivalry that has been prevalent for many years. But China’s economic recovery may be the stimulus needed to overtake the US as the world’s primary superpower. The outcome of the US election remains to be a significant factor in Chinese-US relations over the coming years.
There is a lot to be learnt from China’s response to the virus and hopefully countries around the world will be able to start their own economic recoveries before long.