Editor's note: Guan Tao is the global chief economist at BOC International (China). The article reflects the author's opinions and not necessarily the views of CGTN.

Three years ago, the sudden outbreak of the Covid-19 pandemic hugely disrupted people's lives around the world. Economic activity came to an abrupt halt and the financial markets fell into extreme turmoil in the face of an unknown coronavirus. The International Monetary Fund called it the "Great Lockdown" recession, described as the worst economic downturn since the Great Depression.

In order to cushion the impact of the decline in economic activity on households and businesses, many governments and central banks rolled out unprecedented stimulus policies. China proposed the policy objectives of ensuring stability on six fronts and maintaining security in six areas. China also continuously loosened monetary policy, and issued special government bonds as additional support.

China has made three important contributions to the global economic recovery. The first one is maintaining steady economic growth. In 2020, China was the only major economy to register positive economic growth, achieving 5.2 percentage points of growth rate higher than the global economy. In 2021, China's GDP growth rate was 8.1 percent, setting a new 10-year high. According to World Bank estimates, China contributed 38.6 percent from 2013 to 2021 on average to world annual economic growth, making it the world's top contributor. China has, therefore, become a major engine and stabilizer of the world's economic growth. 

The second contribution is taking the lead in resuming work and production, which helped to stabilize global supply chains. In many countries, due to loose Covid-19 control policies and people's health concerns over the pandemic in the early stage, production capacity did not fully recover until 2021. Some of those capacities are still below pre-pandemic levels. China's industrial value-added (VAI) year-on-year growth rate bounced back to positive territory in April 2020. The average growth rate of the secondary industry in 2020 and 2021 was 5.4 percent, better than that in 2019. Global inflation could have been even higher without China quickly resuming its strong production capacity. The effort also helped China to maintain domestic price stability amid the return of high inflation worldwide.

The third contribution is global investors are maintaining confidence in investing in China. Thanks to high export growth and record trade surplus, the RMB exchange rate remained relatively stable despite a sharp dollar appreciation, and the RMB CFETS index fell only modestly. Over the past two years, China's foreign direct investment has registered double-digit growth and is expected to continue this year. In addition, as the RMB exchange rate has witnessed two-way fluctuations and enhanced flexibility in recent years, Chinese authorities have reduced reliance on administrative measures. Also, with the steady advancement of the two-way financial sector opening up, it has become more convenient for foreign investors to invest in RMB financial assets.

Overall, China has achieved better economic performance at a relatively small cost of pandemic prevention and control.

Like other countries, China needs to strike a balance between pandemic control and domestic economic recovery. China always upholds the principle of protecting people and their lives as the top priority, adheres to a scientific and targeted pandemic control strategy, and efficiently coordinates pandemic control measures with economic and social development. Due to the uncertainty around the pandemic development and the uneven distribution of medical resources, it poses a great challenge for China to fully reopen like Western countries. As a result, China's consumption recovery has not met expectations. In particular, the service industry remains suppressed and structural employment pressure exists. However, with the decline in Omicron's mortality rate and the reopening experiences from other countries, China will gradually move towards normalization in social and economic activities.

While the direction to normalization is clear, the road toward the end of the tunnel is not easy hiking. Overseas experiences, especially from Asian countries, have shown that society needs an adaptive process to gradually overcome psychological fears. During this period, there will be one or two bumps in the recovery of consumption and the service industries. However, overall demand is expected to show a trend of improvement. Especially for next year, against the backdrop of a gloomy global economic outlook, the expansion of domestic demand will be particularly important for China to maintain reasonable growth. Therefore, it is even more critical to optimize the pandemic control policy at this point. As long as the Chinese economy is stabilized, most of the challenges China will face could be properly dealt with, and the RMB exchange rate would also reflect the economic fundamentals.