As the first country to be engulfed in the COVID-19 pandemic, China is several weeks ahead of many other countries on the “curve” of the virus progression. As such, the changing situation in China is being monitored closely by many other countries. While statistical methods of counting infections and deaths have differed across countries, it is generally agreed that China has the pandemic largely under control at the current stage, with increases in new cases rising at a rate of less than 100 per day (although there was a spike to 108 on Sunday, April 12). Of course there is some concern that asymptomatic cases are not being identified effectively, but the fact that the number of new symptomatic cases is low (therefore the hospitals are not overwhelmed) is acting as a kind of proxy to provide confidence to the wider population that the situation has improved dramatically.
Indeed, in China, the public mood moved on from one of fear to one of caution around late February. Since then, while many restrictions remain in place around the country, caution has morphed into mere habit. Having worn a facemask every day for close to three months now, I feel slightly naked in public without one. People are adjusting to the “new normal” and seem to realize that there is a long battle ahead. While they realize it is going to be tough, there is a general sense among the population that China will be able to manage the adaptation process more effectively than most governments around the world.
The government response ramped up quickly after January 23, and restrictions became more and more onerous through February and most of March. Access to residential compounds was banned to people not registered as living within them. Restaurants closed for around 2.5 months, only recently re-opening. Much domestic travel required quarantine upon arrival at destination for 14 days, and a similar policy was introduced for international travel once the pandemic was confirmed as a global problem. Right now, even foreigners with valid visas and working permits are not allowed back into China. The concern now is focused on Chinese nationals returning to China from Europe and America. The draconian measures the government is implementing to take such people directly from airports to quarantine facilities shows how seriously the government is taking these potential “imported” coronavirus cases. Of the 99 new cases reported on April 11 across China, 97 were “imported”, according to Reuters.
Economic impact
Meanwhile, confidence in the government response seems high. Nevertheless, businesspeople realize that many types of business are being seriously hit. Food and beverage, retail, real estate, and travel are the four biggest losers. A lot of people in these sectors have either been furloughed for a period of time or have lost their jobs completely. Migrant workers in the construction sector are hugely impacted. Many of these jobs don’t show up in official government figures, so while there has been a significant uptick in the unemployment rate, it is likely that the real figure is much higher. A lot of lower-earning individuals will be suffering for a prolonged period of time.
Compared with other countries, the support measures that the government has put in place have been relatively limited. The most relevant benefit to businesses has been the partial waiving of the social security contribution made by employers on behalf of staff between the period of February to June. There are other programs in place as well, but most of them require the companies applying to be involved in the effort to combat the virus spread. Loans have also been relatively difficult for many Chinese companies to obtain. The bankruptcy of many companies and major problems for account receivable collection for those that remain standing seems inevitable.
Potential recovery
At the moment certain sectors of the economy are recovering. But not quickly. Malls are open, but sparsely populated. Restaurants are open, but with very few customers. There seems to still be a kind of reluctance among people to go out and enjoy themselves, perhaps worried about opprobrium from the many that are still struggling financially or that they will be accused of potentially spreading the virus. Habits may well have changed permanently. Unsurprisingly, people are reluctant to spend large amounts of money on cars, houses etc. because of the overall uncertainty.
Certain sectors are definitely booming. This will be a worldwide phenomenon, and it in fact may play into the hands of China in the medium term. It is well-known that China is ahead in the “race to 5G”, which is all about “digital” and “remote”. During this pandemic, China probably pulled further ahead. Online teaching and conferencing have boomed. Delivery of goods rather than visiting shops has continued its transition to the mainstream. The economy has taken another step towards modernization.
A lot of the companies that have benefited from that shift will presumably be flush with cash, and keen to invest it overseas going forwards considering the knowledge and technology they have accumulated already in China.
One particular overall impression that I have been left with is that rather than “living”, people in China are choosing to just “exist” for a while. This may be easier for the Chinese population, many of whom remember the tough times before the opening up of the economy in the 1980s and 1990s, compared with the baby-boomers and younger generations in the west who, in the eyes of the Chinese, have been living decadent lives since the 1950s. Nevertheless, this attitude will have severe repercussions for the economy as a whole. To what extent the Chinese government opts to encourage the return of a bit of that decadence that certainly existed in the last several years in China may have a big effect on the medium-term economic impact in the country. The outbreak of pandemic Covid-19 all over the world has disturbed the political, social, economic, religious and financial structures of the whole world. World’s topmost economies such as the US, China, UK, Germany, France, Italy, Japan and many others are at the verge of collapse. Besides, Stock Markets around the world have been pounded and oil prices have fallen off a cliff. In just a week 3.3 million Americans applied for unemployment and a week later another 6.6 million people started searching for jobs. Also, many experts on economic and financial matters have warned about the worsening condition of global economic and financial structure. Such as Kristalina Georgieva, Managing Director of International Monitory Fund (IMF), explained that “a recession at least as bad as during the Global Financial Crisis or worse”. Moreover, Covid-19 is harming the global economy because the world has been experiencing the most difficult economic situation since World War-II. When it comes to the human cost of the Coronavirus pandemic it is immeasurable therefore all countries need to work together with cooperation and coordination to protect the human beings as well as limit the economic damages. For instance, the lockdown has restricted various businesses such as travelling to contain the virus consequently this business is coming to an abrupt halt globally.
Keeping in a view the staggering situation G-20 nations called an emergency meeting to discuss worsening conditions and prepare a strategy to combat Covid-19 as losses could be reduced. The spread of the epidemic is picking up speed and causing more economic damages. It is stated by the U.S. official from federal reserves that American unemployment would be 30% and its economy would shrink by half. As for as the jobs of common people are concerned, there is also a real threat of losing their jobs because with business shutting down that shows that companies will be unable to pay to workers resultantly they have to lay off them. While when it comes to the stock market, it is severely damaged by Covid-19 such as the stock market of the United States is down about thirty percent. By looking over the existing condition of several businesses, most of the investors are removing its money from multiple businesses in this regard $83 billion has already removed from emerging markets since the outbreak of Covid-19. So, the impact of Covid-19 is severe on the economic structure of the world because people are not spending money resultantly businesses are not getting revenue therefore most of the businesses are shutting up shops.
It also observed that the economic recovery from this fatal disease is only possible by 2021 because it has left severe impacts on the global economy and the countries face multiple difficulties to bring it back in a stable condition. Most of the nations are going through recession and collapse of their economic structure that points out the staggering conditions for them in this regard almost 80 countries have already requested International Monetary Fund (IMF) for financial help. Such as Prime Minister of Pakistan Imran Khan also requested IMF to help Islamabad to fight against Novel Coronavirus. Furthermore, there is uncertainty and unpredictability concerning the spread of Coronavirus. So, the Organization for Economic Cooperation and Development (OECD) stated that global growth could be cut in half to 1.5% in 2020 if the virus continues to spread. Most of the economists have already predicted about the recession to happen because there is no surety and still no one knows that how for this pandemic fall and how long the impact would be is still difficult to predict. Besides, Bernard M. Wolf, professor, Economics Schulich School of Business, said that “it is catastrophic and we have never seen anything like this, we have a huge portion of the economy and people under lockdown that’s going to have a huge impact on what can be produced and not produced”.
As Covid-19 has already become a reason for closing the multiple businesses and closure of supermarkets which seems empty nowadays. Therefore, many economists have fear and predicted that the pandemic could lead to inflation. For instance, Bloomberg Economics warns that “full-year GDP growth could fall to zero in a worst-case pandemic scenario”. There are various sectors and economies that seem most vulnerable because of this pandemic, such as, both the demand and supply have been affected by the virus, as a result of depressed activity Foreign Direct Investment flows could fall between 5 to 15 percent. Besides, the most affected sectors have become vulnerable such as tourism and travel-related industries, hotels, restaurants, sports events, consumer electronics, financial markets, transportation, and overload of health systems. Diane Swonk, Chief Economist at the Advisory Firm Grant Thornton, explained that “various nations have multinational companies that operate in the world because the economy is global. For instance, China has touchpoints into every other economy in the world, they are part of the global supply chain. So one should shut down production in the U.S. by shutting down production in China”. Besides, Kristalina Georgieva in a press release suggested that four things need to be done to fight against Covid-19 and avoid or minimize losses. Firstly, continue with essential containment measures and support for the health system. Secondly, shield affected people and firms with large timely targeted fiscal and financial sector measures. Thirdly, reduce stress to the financial system and avoid con tangent. Fourthly, must plan for recovery and must minimize the potential scaring effects of the crisis through policy action. Concerning the serious and worsening conditions all over the world, nations need cooperation and coordination among themselves including the help and mature as well as sensible behaviour of people to effectively fight against Coronavirus. Otherwise, because of the globalized and connected world, wrong actions and policies taken by any state will leave a severe impact on other countries as well. This is not the time of political point-scoring and fight with each other rather it is high time for states to cooperate, coordinate, and help each other to defeat this fatal pandemic first for saving the global economic and financial structure.
