Post COVID-19 era: Recovery of the Chinese economy is strong
Updated 16:47, 12-Jun-2020
Chen Jiahe

Editor's Note: Chen Jiahe is the chief investment officer at Novem Arcae Technologies. The article reflects the author's opinions, and not necessarily the views of CGTN.

The Organization for Economic Cooperation and Development (OECD) has recently published its outlook for the world economy in 2020, which amid the serious economic impact caused by the coronavirus, can hardly be optimistic.

Regarding the Chinese economy, the OECD has made an assumption that cannot come true. The OECD assumed that there are two possible scenarios. The first one is called the "single hit" scenario, which means there is only a single epidemic wave for each country. The other is called the "double-hit" scenario, meaning there will be a resurgence of the virus.

Any country that falls under the "double-hit" scenario, the economic outlook will be gloomier and the negative impact caused by the COVID-19 will be longer. Meanwhile, more lives will be lost. The report of the OECD made a unanimous assumption for all countries in the report, leaving the question of whether there will really be a double-hit to the readers themselves.

However, by going through the whole timeline of the COVID-19 outbreak in China, we believe that there will not be another wave here. Therefore, the economic recovery will be faster than what can be expected if the virus re-appears again.

The reason behind this conclusion is simple: the best weapon that the COVID-19 has had is the element of surprise. As long as society is prepared and authorities do the necessary job, it is not a hard thing to wipe out the virus and prevent it from emerging again. Experience from China has proven this. Experiences from other countries, such as Japan, South Korea, Thailand, France and Germany have all proven this.

Containers at the Lianyungang Port in Lianyungang City, east China's Jiangsu Province, April 14, 2020. /Xinhua

Containers at the Lianyungang Port in Lianyungang City, east China's Jiangsu Province, April 14, 2020. /Xinhua

If we really go into the daily lives of the Chinese people, rather than making an assumption from our offices, then it is clear that today the Chinese people are very cautious about COVID-19.

When everyone in the society is so cautious and vigilant about the return of coronavirus, I personally believe there is no possibility that the virus can return. Therefore, the economic recovery of China would most likely be following the most optimistic scenario that has been set by the OECD, or even be better than that, since the growth potential of China is still huge.

Recent economic data has shown us the bright picture for China's economic recovery. The Consumer Price Index (CPI) in May dropped to 2.4 percent, the lowest level since early 2019. This shows us that the production of consumer goods in China has resumed pretty well.

While the international trade has shrunk in recent months, the trade between China and members of the Association of South East Asian Nations has kept on growing in the first few months of 2020.

This small but positive growth rate has shown us a few things. First, the growing potential for trade between China and ASEAN members are huge. Even in the terrible scenario of COVID-19 the trade between the two economic entities can still grow. Second, as many of the ASEAN members have been able to contain the COVID-19 pretty well, this rise in the trading volume shows us how good the economic recovery can become as long as the virus is contained.

Meanwhile, the confidence of businessmen in China has increased to a positive state. Since the historical trough of 35.7 in February, China's PMI (Purchasing Manager Index) has stayed above 50 for three straight months. With COVID-19 expected to be contained in more countries in the coming months, we should be confident about the recovery of the Chinese economy, as well as the economies in those countries that have been able to successfully contain the spread of the virus.

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