CGTN | 11-Jun-2020
In a post-COVID-19 world, how will the Chinese economy get back on its feet? Several former Chinese officials and scholars on Thursday shared their views with journalists in Beijing. China was the first country to be hit by the COVID-19 pandemic, and the first to overcome the deadly virus.
Nevertheless, the pandemic has sent shockwaves through the world’s second-largest economy, bringing the country’s GDP down 6.8 percent in the first quarter. While crucial indices such as the PMI have picked up since, consumption will be the key driver to pull the economy back on track.
Both supply and demand should be increased, said Wang Zhaoxing, former vice chairman of the China Banking Regulatory Commission. “On one hand, provide more high-quality products and services for consumers. On the other hand, raise people’s disposable income. For instance, provide coupons, and financial support to low-income people and the retired,” said Wang.
Consumption aside, balancing fiscal revenue and expenditures are also vital for an economy to remain sustainable. In the first quarter, China’s fiscal revenue fell by 14.3 percent year on year, while expenditures also dropped. Looking forward, Chinese Premier Li Keqiang announced China will pursue a more proactive fiscal policy.
“Some have been questioning whether transferring two trillion yuan to local governments is strong enough. I think the government is taking a gradual approach,” said Liu Huan, professor from Central University of Finance and Economics, adding that this kind of stimulus is to mainly protect businesses, so that employment and livelihoods will be ensured as well. “There are more tools in the toolbox, but the risk of inflation should always be taken into consideration,” said Liu. Experts say fiscal stimulus alone is insufficient to keep companies thriving and job secure. Prudent monetary policy is essential as well.
China-U.S. ties
The coronavirus pandemic has put a strain on relations between Beijing and Washington. “China and the United States should keep timely communication on major issues. The scope of such communication should return to normal and be consistent with the status of both countries as two major economies. Talks should resume, not only on trade, but also on other major issues,” said Zhu Guangyao, China’s former vice finance minister.
He added that both sides share a long history of close economic relations, and that this serves the best interests of the people of both nations. As China’s economy recovers from the pandemic, officials say they expect a sharp rebound in the third quarter of the year.
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