Question

In a paragraph explain how is Covid-19 affecting China's economy?

Answer 1

As the first country to become engulfed in the COVID-19 pandemic, China is on the "curve" of virus progression a few weeks ahead of many other countries. As such, several other countries are closely watching the developing situation in China. Although statistical methods for counting infections and deaths varied across countries, it is widely accepted that China currently has the pandemic largely under control, with rises in new cases increasing at a rate below 100 per day

Meanwhile, confidence seems high in the government's response. Nonetheless, businesspeople know that many business forms are being hit hard. The four biggest losers are food and beverage, retail, real estate and travel. Many workers in these industries have either been furloughed for a period of time, or have completely lost their jobs. Migrant jobs are greatly impacted in the construction sector. Many of these positions don't appear in official government reports, and although the unemployment rate has gone up slightly, the actual number is likely to be even higher. A majority of the lower-earning people will struggle for an extended period of time.

The support initiatives which the government has placed in place is relatively small compared to other countries. The most important advantage for businesses was the partial waiver between February and June of the social security payment provided by employers on behalf of the workers. Other programs are also in effect, but most of them allow the organizations seeking to be included in the campaign to combat the spread of the virus. Loans were also fairly difficult to obtain for many Chinese businesses. Many companies' bankruptcy and major account receivable collection problems appear inevitable for those who remain standing.

At the moment certain economic sectors are recovering. But not fast. Malls are sparsely populated but open. Restaurants are available but they have very few clients. There still seems to be some sort of reluctance among people to go out and enjoy themselves, perhaps worried by the many who are still struggling financially or accused of spreading the virus potentially. Habits could well have forever changed. Unsurprisingly, because of the general uncertainty, people are hesitant to spend significant amounts of money on vehicles, homes, etc.

Those markets definitely are booming. It will be a worldwide trend and, in the medium term, it can potentially play into China's hands. China is well known to be ahead in the "race to 5 G" which is all about "digital" and "personal." China possibly pulled ahead further during this pandemic. Teaching and conferencing online have boomed. Delivery of products has continued its shift to the mainstream, rather than visiting shops. The economy has taken another step towards modernization. Many of the businesses that have gained from this change are likely to be cash-flowing and able to spend it abroad, despite the information and expertise they have accumulated already in China.