By Cai Fang | China Daily Global | Updated: 2020-02-12
The year 2020 is of significance for China.
First, it began with the spread of the novel coronavirus, which originated in Wuhan, Hubei province. With travel bans deterring people from moving across regions, economic activities have weakened throughout the country.
As a result, some of the annual indicators of development may be lower than expected.
Second, it is the year in which several economic and social development goals are scheduled to be accomplished. These include doubling GDP and per capita disposal incomes of rural and urban residents compared with 2010 levels, and alleviating absolute poverty in rural areas.
Third, it is a year when the world economy is looking to China amid the sluggish growth in global GDP and trade because of reverse globalization, Brexit and trade wars.
In 2019, the world economy grew 2.4 percent and the Chinese economy by 6.1 percent. China contributed 40.3 percent to global GDP growth, while its share in the world economy increased from 15.8 percent to 16.4 percent.
Questions have been raised by economists, businesspeople and observers about what the Chinese economy would be like in the rest of 2020 after the coronavirus epidemic.
Although it is too early to predict the performance of the Chinese economy for the whole year, certain conclusions can be drawn based on analysis of the long-term fundamentals of the Chinese economy and potential impact of the epidemic.
First, the negative impact of the epidemic on the economy is significant, given the coronavirus's fast-spreading nature, but it will fade once the epidemic is contained.
The virus-related lockdown in cities and restraints on movements across regions lead to undesirable consequences, such as repression of household consumption and underproduction in small and medium-sized enterprises, which bring down the GDP growth rate.
However, economic growth will pick up favorably in the second quarter and confidently in the third quarter.
Second, the government has a range of macroeconomic policy tools that already have been deployed to shield the economy from the present shock.
China's GDP was 41.2 trillion yuan ($5.9 trillion) in 2010 and it expects to reach 82.4 trillion yuan in 2020. To achieve this goal, a growth rate of 5.5 percent to 5.7 percent is needed. It also needs to increase household income from the 12,520 yuan in 2010 to 25,040 yuan.
Based on the income levels reached in 2019, this can be achieved through an easily achievable growth rate of 1.9 percent. As for the alleviation of rural poverty, it also can be achieved. Between 2012 and 2019, the average number of people lifted out of poverty each year was over 13 million, which left only 5.5 million to be lifted out of poverty this year.
The novel coronavirus pneumonia outbreak in China does challenge the growth of the economy, posing a stumbling block to social development.
Still, the outbreak will not prevent China from achieving its overall goal of completing the building of a comprehensive well-off society in the same year; nor will it hurt the sustainable growth capacity of the Chinese economy in the long run