By Sardar Ameer Jehanzeb
As a result of the COVID-19, the global economy gets in turmoil due to the coronavirus pandemic. China has a unique position to lead the subsequent recovery. Like other countries hit by COVID-19, China’s economy also suffered greatly over the course of the outbreak, its GDP contracted by 6.8 percent for January-March period.
However, China has taken COVID-19 under control and the economy has started to reopen, at a time when much of the rest of the world is facing the worst of the pandemic. Although many governments are in disaster management phase, Chinese government is now looking ahead towards putting the economy back on track for the rest of 2020 and after wards. With the size of China’s economy, its success will be contributory in revitalizing the global economy as a whole and with the virus under control and ambitious economic policies set to be released; China appears well located to achieve its ultimate goals.
China has conducted bulk testing, the aggressive use of quarantines and physical distancing, and the adoption of technology to track the spread of the virus, Chinese authorities managed to control the COVID 19. As a result of China’s success handling of the virus, most businesses have reopened, even in Wuhan.
However, an expected rebound of COVID-19 will be of a grave concern until a vaccine is developed, the infrastructure China has already put in place to manage the outbreak will empower authorities to isolate new outbreaks. Chinese authorities, have instituted virus tests in workplaces like schools, offices, factories, etc. They have also launched a smartphone app to track the individual’s health. These measures will allow the Chinese authorities to react speedily to the COVID-19 cases.
Although COVID-19 has tarnished some of China’s short-term economic goals, the government still is determined to accomplish its goals for the coming years. Before COVID-19 emerged, most economists expected China’s GDP to grow by around 06 percent in 2020. To do so, China will likely enact a stimulus package to jolt the economy back to life. Because of the government’s high levels of debt emanating from its stimulus in response to the 2008 financial crash, this round will likely be lower.
The stimulus package will be sizeable, this time focused on developing “new infrastructure”, such as 5G networks, NEV charging stations, energy efficiency programs, and other initiatives that will help build China’s economy of the future. If China’s stimulus policies are effective, they will not only stabilize the economy in the short-term but help transition the country towards a high-tech and service-driven economy to set the stage for the next decade.
The global economic outlook is highly uncertain due to the unpredictable nature of COVID-19 and the ability of different countries to control its spread. Given the current situation, however, economists generally expect economic contraction in 2020 before a recovery in 2021. If and when China’s economic stimulus policies are enacted, the country’s economy will be on the upswing. Despite the contraction in China’s economy during the first quarter of 2020, the IMF still projects the economy to grow by 1.2 percent for the year. For 2021, the IMF predicts China’s economy will grow by 9.2 percent, leading all major economies.
While this year’s 1.2 percent is significantly lower than the approximately six percent growth most economists expected for China before the coronavirus outbreak hit, that China will manage positive growth at all is a testament to its strength. And if the IMF’s projections are correct, China will be rapidly making up for lost time in 2021.
In contrast to China, economists predict most major economies to contract in 2020. Although the US has already pumped massive amounts of money into stabilizing the economy, given US$2.3 trillion financing package, the IMF projects the US to contract by 5.9 percent in 2020 and grow by 4.7 percent in 2021. Similarly, the IMF expects the Euro Area to decrease by 7.5 percent in 2020 before bouncing back to 4.7 percent the next year.
Just as emerging Asian markets were the key contributors of global economic growth before the COVID-19 pandemic, they will be essential in driving the recovery. With the virus largely under control in China and the government equipped with the resources to stimulate the economy, China is set to be a leader in the global recovery; on the back of both is unparalleled production capacity and enormous consumption market.
Ultimately, however, a global recovery will depend on the ability of governments worldwide to contain COVID-19, thereby preventing future outbreaks and allowing countries to reopen for business. In the case of the economic crisis set off by COVID-19, then, economic recovery begins with an effective public health response across the globe.
Despite the deadly outbreak of Covid-19 virus in the world, which had shaken the global economy, Pak-China economic cooperation is showing signs of revival as established with the arrival of the first bulk cargo ship ‘V Manet, carrying wheat and urea for Afghanistan transit trade, at the Gwadar seaport. The speedy initiation of ML-1 Railway project under CPEC is another good initiative. China has given a serious thought on this project vis-à-vis its different implementation phases.
China has also offered a great opportunity to explore the potential of the ‘BLUE ECONOMY’ of Pakistan. CPEC has potential to accelerate goods and services within the country. With increased regional connectivity and maritime cooperation under CPEC, ‘BLUE PARTNERSHIP’ would help Pakistan to promote its economic growth. Cooperation and opportunities offered by the Chinese government and companies under the CPEC, both the countries are devising a development plan to promote coordination among the stakeholders to explore the potential of the blue economy.
The outbreak of COVID-19 and locust plague has strengthened Pakistan-China bilateral cooperation. Agricultural commissioner at the Chinese Embassy in Pakistan has informed that bilateral cooperation to combat locust in Pakistan is commendable. Virtual salon, established on joint efforts to control locusts, has attracted almost 170 delegates, including agriculture and technology experts to discuss cooperation between China and Pakistan in locust control.
Both the iron brothers have joined hands and extended their full support to further strengthen CPEC, the pilot project of Belt and Road Initiative (BRI) even after the outbreak of COVID 19.